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[CARS WHOOSHING] LEE AXDAHL: 12th Street is the Main Street on Sioux Falls' West Side. Crossing Interstate 29 heading west, the driver sees the Pine Crest Motel on the left, a cluster of old trailer homes on the right. Further down the street, a campground, a cluster of convenience stores and assorted small businesses, including two storefronts selling granite tombstones.

At this point on the road, if the wind is from the northwest, a driver might smell a distinctive odor of fuel. This odor is the calling card of the company, which in the past year has become the most discussed and some would say, the most controversial business on the West Side, the local office of Williams Pipeline Company with corporate headquarters in Tulsa, Oklahoma.

The Williams Pipeline Company Sioux Falls tank farm occupies a long stretch of 12th Street, huge white storage tanks dot the property. It is here at the west end of the tank farm where the company's troubles are centered. There are six rust-stained storage tanks here, each capable of holding some 1.5 million gallons of fuel.

The big tanks are the 1300 series. And the most southwesterly of the bunch, Tank 1341 has been leaking. Throughout this report we will examine circumstances surrounding the leak inside Tank 1341. We will examine charges that Williams Pipeline Company knew Tank 1341 was leaking weeks, if not months, before it publicly acknowledged the fact, charges that the company failed to report all spills at its Sioux Falls tank farm.

We'll hear about a supervisor who some felt was contributing directly to spills and other environmental problems at the tank farm. Staffing and safety procedures at Williams Sioux Falls facility will be examined. We'll listen to the company's side of the story from a manager who concedes that his business has made mistakes and admits that it has not complied with all federal and state laws. The same manager will also tell us Williams has seen the light and is ready to mend its ways.

Finally, we'll hear from angry residents, businesses, and school children, whose lives have been disrupted by the controversial pipeline company. These folks live in the Hayward neighborhood of Sioux Falls, the site of the Williams Pipeline Company tank farm.

SPEAKER 1: Right now, I'm scared because I'm afraid the gas might pollute the water in our area, or if something happens and the tanks would blow up.

SPEAKER 2: A year ago, I tried to get the piece of land to the north of the shop rezone and the city of Sioux Falls refused it because the problem with William brothers.

SPEAKER 3: We didn't know how it was going to affect us, business-wise, value-wise. Right now, we're wondering if our land is worth what we expect it to be worth at this time.

SPEAKER 4: I would have to find somebody who was very naive, never reads a newspaper, and has a bundle of cash before I could sell this house.

SPEAKER 5: I think that you owe all the people here a very heartfelt apology for what has happened.

SPEAKER 6: The problem is still there, and what's to say in 10 more years that the problem won't be worse?

[PLASTIC RUSTLING]

LEE AXDAHL: The sheets of thick black plastic covered 20-foot high mounds of dirt excavated from the site of a recent Williams Pipeline spill near Sioux Falls. The site marks the most recent of a long string of accidents which Williams Sioux Falls official calls bad luck. The bad luck includes problems at Tank 1341. The bad luck includes a 10,000-gallon above-ground spill.

The bad luck includes a storage tank explosion last year in Milford, Iowa, which took the lives of three maintenance workers. Williams' most highly publicized incident in Minnesota includes a 1986 summer explosion in Mounds View, which killed two residents of the neighborhood when a pipeline ruptured in front of their home and exploded into sheets of flame.

One of the employees lucky enough to survive the Milford, Iowa blast is Larry Martin. Badly burned in the accident, Martin does not expect to return to work at Williams. He doesn't even want to think about going inside another fuel tank. Martin is suing the company and others over the Milford accident.

Martin worked inside a tank at the Sioux Falls facility three months before he nearly lost his life at Milford, a tank with the name 1341. There is no disagreement that Tank 1341 was, in fact, leaking for an undetermined length of time prior to the May 30th evacuation of Myrtle Doobie, an elderly Hayward neighborhood resident, from her nearby home.

Tank 1341 is within a couple hundred feet of the Doobie home. What is in dispute is when the company realized the tank was leaking. In our six-week investigation, we have found evidence that Williams' supervisory personnel knew that 1341 was leaking in April, nearly two months before Doobie was evacuated from her home due to potentially explosive levels of gasoline fumes inside the house, nearly two months before Williams acknowledged 1341 was leaking.

Had Williams Pipeline officials acted in April to stop the underground movement of the gas leak, one state official says damage to the neighborhood might have been limited. Danny Thornburg is Williams division manager for an area, which includes the Sioux Falls terminal. He's been the corporate spokesman for the 1341 incident.

And Thornburg says Williams first became aware of the leak during a June 1986 inspection of the tank after the Doobie evacuation directed suspicion at 1341. Thornburg claims there is no evidence that he or anyone at Williams knew the tank was leaking prior to the June inspection.

DANNY THORNBURG: There's certainly no attempt to cover up things, to make problems worse. I think we're trying to be very open about it. I think we've cooperated with every agency in the press.

LEE AXDAHL: Despite Thornburg's assertion, there is evidence that a Williams supervisor did indeed know that 1341 was leaking well before June. Two months before Doobie was evacuated from her home, a Williams maintenance crew spent parts of three days in April working inside 1341. Larry Martin was on that crew, which worked on the tank April 2nd through the 4th, 1986.

LARRY MARTIN: It was dirty, messy, and-- I don't know how long it took us to clean it, but-- well, I thought we did a real good job cleaning it, so we could find holes and stuff in there.

LEE AXDAHL: Martin says the crew found extensive corrosion inside 1341. And he says when some of the material accumulated on the tank bottom was cleaned, the crew discovered 1341 had holes in it.

LARRY MARTIN: We did find that I could recall was three, I think. There could have been more. But one, I know is about the size of-- I could stick my finger in it. The other one was probably a little bit smaller. They're all about the same.

LEE AXDAHL: Martin says the workers were sure the holes went all the way through the tank bottom and that gas had leaked out.

LARRY MARTIN: We poke rods down through there, and you could smell gas through them, so. We could smell that, and we could smell the soil when we poked down through there.

LEE AXDAHL: Division Manager Thornburg, however, stands by his story and says the April inspection and repair work on 1341 did not reveal any major problems. Further, he says there were no signs that the tank was leaking.

DANNY THORNBURG: We were in it briefly in April of 1986, just about one month before Mrs. Doobie's home was affected. And then at that time also, we didn't notice any problems.

LEE AXDAHL: Bill Prothe supervised the maintenance crew during the April inspection of 1341. Prothe's report, provided to us by Williams, notes that the crew found corrosion inside the tank and that 160 weld patches were made to correct so-called pitting of the 1/4 inch steel bottom.

But a key entry is found at the end of the one-page report stating that, quote, "All pits over 7/100 of an inch, repaired." Maintenance crew member Larry Martin claims the statement as open-ended. He further asserts that the entry does not indicate how deep the pitting was in the steel bottom or if the pits mentioned were, in reality, holes, allowing the hazardous contents to leak into the groundwater.

Williams' manager Thornburg claims that if holes are discovered in tank bottoms, they are mentioned, most of the time, on supervisors reports, but not always. Larry Martin, who should have been in a position to know, says the maintenance workers inside 1341 told Prothe about the holes, but Thornburg says he talked to his direct supervisor and was told that Prothe did not say anything about finding holes.

The man who could clear the conflicting statements was also like Martin, involved in the Milford, Iowa tank explosion. Bill Prothe, unlike Martin, however, died shortly after the accident last summer. While Thornburg says he was unaware of the holes at the time of the April inspection, he does admit he later heard stories that leaks were found.

DANNY THORNBURG: I've heard rumors of that. In fact, some of our terminal operators, in fact, one of them in particular has stated that he remembers on that occasion that there were some holes found. However, I was never told.

LEE AXDAHL: Asked if he investigated those rumors, Thornburg said he couldn't recall.

DANNY THORNBURG: I don't know if we have talked to them or not. Certainly, that's something that should be considered. We have had so many other things going on, really. That wasn't at the top of my priority list.

SPEAKER: I'm curious as to how your terminal operators could report consistent large losses from Tank 1341. And yet, it took Mrs. Doobie's evacuation and the Hayward evacuation for you to act.

LEE AXDAHL: That allegation was made by the wife of a Williams pipeline employee at a recent public hearing in Sioux Falls, an allegation, which has circulated widely in the Hayward neighborhood. While Thornburg told us he couldn't recall investigating the rumor, he does say, he talked to most individuals at the company who worked with Tank 1341 about the charge.

DANNY THORNBURG: The operators that we talked to about this didn't give us any information. And we didn't find any evidence of any documented written information that would lead us to believe that there was a problem that existed, that we have any evidence of that people covered up or didn't bring to our attention.

LEE AXDAHL: John Smith is secretary of the South Dakota Water and Natural Resources Department. Smith says if the leak had been reported to him in April, when the holes were said to have been found instead of June, damage from the spill, which includes the Myrtle Doobie evacuation and the abandonment of Hayward Elementary School could possibly have been limited.

[MACHINE WHIRRING]

This monitor is designed to detect fumes. Monitors such as this one are scattered throughout the Hayward School, which was closed in September 1986 by gas fumes. Raleigh Randall is the school district's supervisor of buildings and grounds. He says gas fumes were first detected in the north wing of the building. The fumes apparently entered through the heating ducts.

RALEIGH RANDALL: There was one thing that threw us off a little bit and that was we are subject to some odors in this area. There's a feed mill over here. And that, sometimes we just pick up an odor from that for years that went on. So the first odors you pick up, well, people didn't think too much of it. Pretty soon, they think that smells like petroleum. And so that's-- they weren't in here very long after that. That's when it was evacuated.

[CHILDREN CHATTERING]

LEE AXDAHL: It's recess time at Central Baptist Church, one of three locations where displaced Hayward Elementary students now attend class. The children are playing in a parking lot at the church, which some say is a poor replacement for the school because it is small and overcrowded.

Hayward students have attended class this year in three different places. Students started the year at the original school. When it was closed, the district sent them to nearby Oscar Howe Elementary School, where officials were forced to run two shifts to accommodate the new influx of young children.

After three weeks, the students were transferred again. Sixth graders went to Axtell Park Junior High, third, fourth, and fifth graders to the South Dakota School for the Deaf, and kindergarten through second grade to Central Baptist Church. Despite initial parental concern about the transfers, Mary Boatwright says the children appear to be resilient. Still, she says the novelty of a 45-minute bus ride to school each day wore off for her children after three days.

MARY BOATWRIGHT: It's been convenient for the adults, I'll tell you that much. The parents actually like it, to be able to sit right here and watch their kids get on the bus. They're actually supervised more hours of the day because it takes some 40 minutes to get to school. Our kids, I think, are bussed further than any other kids in the school district.

LEE AXDAHL: Linda Walls lives behind the now empty Hayward School, a school surrounded by a newly constructed chain link fence, its gate padlocked shut. Her fourth grade daughter attends class at the School for the Deaf while her sixth grade son attends Axtell Park Junior High. She says the experience hasn't been all bad.

LINDA WALLS: Well, my daughter's learned to speak sign language, so that's a benefit. She gets to use it on the playground because they have playground time at the same time. But otherwise, they hate the bus ride. It's always a hassle. There's always some little problems on the bus, and it's mostly because most of them have never ridden in a bus before. And it gets to be a long ride.

LEE AXDAHL: It's the uncertainty that Walls finds hard to accept.

LINDA WALLS: We've gone through so much in the last six months that you don't know which end is up anymore.

[PAGES FLIPPING]

LEE AXDAHL: 12-year-old Anna Saretzki flips through pages of a scrapbook she has been keeping since the gas leak at Hayward was first reported. Anna views the Williams Pipeline trouble through the eyes of a child. She thinks of things that might have been.

ANNA SARETZKI: Like patrol, we could have done that, but we can't do that now. And I don't know. Just being tapped at Hayward, and now you're just small again like, an extra.

LEE AXDAHL: Anna's sixth grade classmates had a recent writing assignment about the Williams spills. Throughout this story, we will hear from a number of her friends reading excerpts from their papers.

DUDSON: Hello, my name is Dudson. I am 12 years old, and I go to Hayward School. This is how I feel about Williams Pipeline. I think they should find new jobs for the teachers. They should build another school and name it Hayward II. Williams Pipeline hasn't had the greatest pass, but if they would check and restore some of their old and rusty pipes, they could probably pull themselves together.

When they build another school, they should make Hayward into a park for people and tear everything but the gym and make that a building alone.

LEE AXDAHL: Tank bottoms is a term used to describe the sludge which accumulates at the bottom of a petroleum products storage tank. It is a noxious mixture, which many states classify as a hazardous waste. Companies in South Dakota are required to sample the sludge to determine what substances are present in the mixture.

Depending on the analysis, the company is required to either dispose of it as a hazardous waste or as a less dangerous solid waste. The analysis is required, of course, to prevent groundwater contamination. Williams manager Thornburg admits that years ago, the sludge was disposed of at the tank farm without any second thought to groundwater contamination.

DANNY THORNBURG: Normally, the practice used to be when we cleaned tanks and scrape the sludge out of the bottoms of the tanks, they buried that on the tank farm around the berms of the tank where our little retaining walls are, the earthen walls around the tanks. And so we know that there's locations on our terminal that has buried sludge.

We just don't know where they are because no maps or records were kept of that in previous years. That practice, I guess, stopped apparently about 10 to 15 years ago.

LEE AXDAHL: Thornburg says Williams now takes proper precautions in handling the material.

DANNY THORNBURG: What we've done with the sludge is haul it off to approved hazardous waste disposal sites. If it was hazardous, most of it's not, some of it's been hauled to landfills. And in the last few years, we've been hauling it to Kansas City to reprocess it.

LEE AXDAHL: But that statement is not believed by former employee Larry Martin. He has seen sludge, as much as 1,500 gallons, pumped into what is called the burn pond, also referred to as the burn pit at the Sioux Falls facility. The pit takes its name from the early days of the terminal when it was used as a dumping site for spilled product, sludge, and other material.

The pit was set afire from time to time to simply burn off the accumulated petroleum products. Williams has stopped that practice, and Thornburg says the pit is now used as a separator. That is, relatively clean water is pumped in, and if any product is still present, it can then be drawn off. But Martin claims the burn pond has been used in the last few years as a handy dump site for all sorts of waste, from hazardous sludge to motor oil from employees' vehicles.

Martin is sure he has seen sludge pumped directly into the pit, not hauled away as some Williams officials say. This is an important assertion, considering the location of the facility over the Big Sioux aquifer. In addition, Martin says when it rains hard, the pit fills up, and some of the noxious contents must be pumped into a nearby ditch.

LARRY MARTIN: Yeah, we had a drainage ditch there. We a lot of times pumped the burn pond bottom out. But if you notice along that ditch, you can see that there was a lot of dead stuff in there. But we did get some product would go in there.

LEE AXDAHL: Asked about Martin's accusations, Thornburg contradicts his earlier statement that the company now follows proper procedures in disposing of the sludge. Thornburg was asked if sludge has ever been dumped into the burn pond.

DANNY THORNBURG: Not normally, but I would suspect sometimes it has been.

LEE AXDAHL: The burn pond is a source of concern to nearby businesses, some of which have had their wells contaminated. Thornburg is committed to dealing with that problem. He says Williams Pipeline intends to clean up the burn pond.

DANNY THORNBURG: We're going to excavate all the soil at the burn pond and dispose of it properly. We're going to eliminate that as a potential contamination source and have an entirely new and up-to-date water treatment system that will be acceptable.

LEE AXDAHL: There are other problems with the tank sludge at the Williams Sioux Falls terminal besides the lost buried material and the burn pond sludge. Larry Martin describes a tank cleaning procedure he's seen. He says shallow pits were dug next to the storage tanks, which were then lined with plastic. Sludge from the tanks was then dumped into the pits while awaiting transportation.

Martin says the plastic would often rip. Martin was asked if some of the sludge seeped into the ground.

LARRY MARTIN: Oh, yeah, there has to be. Like I said, some of the plastic would rip. One little chunk of dirt in there, the hole in the plastic, a little windy and cold-- and when the trailer would come to pump it, he'd suck holes through it, too. So it was bound to escape.

LEE AXDAHL: Thornburg cannot deny that Martin's memory is accurate.

DANNY THORNBURG: I can't say that that didn't happen, but that's not typical. It's possible, certainly.

LEE AXDAHL: Williams' mishandling of tank bottom material apparently is not limited to Sioux Falls. Former Williams employee Barb Griffith has worked at Minneapolis at Williams Southeast Minnesota facility near Rochester and in South Dakota at Sioux Falls and Watertown. Griffith left the company in early 1987 after working just over five years with the corporation.

Griffith is currently suing the company, charging sexual harassment and discrimination. But she says at Watertown, which is in division manager Thornburg's area, and Rochester, which is not, she saw a tank bottom sludge drained directly onto the ground and left to seep into the soil.

BARB GRIFFITH: The water that we got out of the bottom of the tanks was black and thick. It had a bad smell. It would look nasty on the ground for a few weeks until it rained a few times and ran where it wanted to and soaked into the ground.

LEE AXDAHL: Griffith says the material was drained twice each year. She says about 400 gallons were drained each time from the three tanks in Watertown and the seven Rochester tanks. Griffith claims she was required to drain the material during her time at Rochester, while in Watertown, she saw others do it.

At Rochester, Griffith notes, employees knew the practice was illegal, but she says it was done at the request of supervisors.

BARB GRIFFITH: We didn't like doing them. My immediate supervisor didn't like putting those-- putting it on the ground, but we had no choice. We were told it was something that had to be done.

LEE AXDAHL: The release of tank bottom onto the ground is against South Dakota law. An official with the State Water and Natural Resources Department says it also violates Federal Environmental Protection Agency regulations. Williams could be permitted to dump the tank water on the ground if it could prove the material is not hazardous.

However, division manager Thornburg says the water is not analyzed before it's released onto the ground. Thornburg does say the company is phasing out the practice. He says it's no longer used in Sioux Falls, but is in Watertown. He says Williams recognizes the environmental questions raised by the practice and is switching over to hauling its tank bottom water to safe disposal areas.

AMY WOLBER: My name is Amy Wolber. This is about Williams Pipeline. It was fun going to Oscar Howe, but I would have rather been at Hayward. It's also fun being an Axtell since I'm going to junior high here next year. Now I know where almost everything is. The least Williams could do is fix up the housing situation over by Hayward.

They have millions and tons of gas spilled all over South Dakota. I think they should clean up their act and their gas bills. I have two brothers and one sister. We're all going to three different schools. I mean, what a mess.

[WATER GUSHING]

LEE AXDAHL: Hayward resident Ralph Carnaby is concerned about his tap water. He has a private well and lives next to the closed Hayward School and across the street from Williams. The Carnabys, along with other Hayward homeowners, have been especially hard hit by the Williams spill. They feel the leak has given the neighborhood a bad reputation as an undesirable place to live.

Carnaby put his house on the market last summer after undergoing surgery for stomach cancer. He says the house is too much to take care of. He had found a buyer when the Tank 1341 spill was first reported.

RALPH CARNABY: It just fell through. They felt they didn't want it, and couldn't blame you for not taking it, after they found out there's gas in the-- nearby.

LEE AXDAHL: Like most homeowners in the area, Carnaby draws water from a private well. Last month, tests revealed the presence of gasoline in his well. He has since tapped into a new well requiring a special filter. In spite of his experience, Carnaby doesn't blame Williams.

RALPH CARNABY: I don't feel bitter about it because there's nothing the person can do about it. It's just one of those things. I still think that Williams is doing what they can do to straighten it out.

LEE AXDAHL: Another Hayward homeowner, Bernie Waltz, does blame Williams. Waltz says his biggest fear is that the company will file for bankruptcy before the spill is cleaned up, leaving homeowners to struggle with the contamination on their own.

BERNIE WALTZ: Had I any idea of the reputation of a Williams Pipeline Company when I bought this house, I've ought to check that out first. But at the time and the incidents in Iowa with the tank exploding and the three people being killed or the incidents in Crystal or any of the spills here hadn't really come to light yet. Williams pipeline didn't have the reputation around here that we were aware of.

Now, anytime in the future I'm looking at a house and there's anything like that around, I'm going to find out who owns it.

LEE AXDAHL: Waltz has had his house on the market since last November. He complains that people won't even come to look at his property since the Williams spill was reported.

BERNIE WALTZ: I've got to feel that it's affected the value of my property. I know it hasn't gone up in value, and I know it hasn't stayed the same, and there's only one other way to go.

LEE AXDAHL: Waltz, an industrial engineer, lost his job late last year and was unemployed for several months. He turned down two job offers in Minnesota because he couldn't sell his home.

BERNIE WALTZ: The options weren't that good. We seriously considered letting the bank have it back. There's a house-- three houses up from us that's sitting there empty. And he just packed all his things and headed for California. And he's just going to let the chips fall where they may. And we very seriously considered it, but-- to me, those options were unacceptable.

LEE AXDAHL: Waltz does have a new job in Sioux Falls and expects to wait out his current problem, a turnaround he doesn't expect any time soon.

BERNIE WALTZ: I would have to find somebody who was very naive, never reads a newspaper, and has a bundle of cash before I could sell this house.

LEE AXDAHL: Williams does have its defenders in the neighborhood. Preston Wobbema thinks Williams has been getting a bum rap. His house is not on the market, but he doesn't believe his property value has decreased.

PRESTON WOBBEMA: I've called five appraisers. I've called my banker, I've called a couple other bankers who I know, and there is no-- there is no dollar amount of damage. There is actually no visible damage at all. There's no depreciation of our house value. There's no-- there's a-- all it is hype. The more it's talked about, the worst our situation becomes because of the talk.

LEE AXDAHL: Real estate appraiser Dennis Hollis says there may be some truth to that. Appraisers don't make the market, Hollis notes. And public perceptions are not always based on fact. Eight houses in the Hayward area are currently on the market. So far, one has been sold since the spill. Hollis thinks it's too early to determine the trend.

DENNIS HOLLIS: There are just so few sales occurring in that area that it's impossible to draw a trend from it. I do have a sale that occurred in late 1986 that sold for almost what it was listed for. And this property was listed after the problems of Hayward became known, and it also sold after that. And coincidentally, this property sale showed a great increase in value from the time that it sold in 1983, which had been prior to that. So if you can infer a trend from one sale, that would be it.

ERIC TENNYSON: My name is Eric Tennyson from Hayward. As you know, Hayward had a gas leak in September, and we had to be transferred to different schools. I think it would be nice if the sixth graders could have been at Hayward for our last year. My family has gone to Hayward for 25 years, and it would be nice if the last one in the family could have gone there.

LEE AXDAHL: The relatively shallow groundwater underneath the Williams Sioux Falls terminal moves in a south-southwesterly direction. It was this flow which directed the petroleum-polluted water to Myrtle Doobie's home in May of 1986 and to Hayward Elementary School in September of that same year. While the gasoline carried to those locations was traced back to Tank 1341, there have been other spills of fuel at the facility.

Larry Martin says there are places at the tank farm which are simply saturated with fuel, contributing to the foul smell, which area residents can detect up to four blocks from the terminal. Martin says there is an inattention to small leaks at the facility. He recalls dripping pipes that went for months without repair and larger spills, which apparently went unreported to proper government officials.

LARRY MARTIN: Those ground pipes that run from tank to tank there, they would cross over, whatever they call them, would spring a leak, rust someplace underneath. There was a lot of them. And then some of the dresser sleeves, we've had leaks there.

LEE AXDAHL: Martin says in the case of incidents involving dresser sleeve accidents, several hundred gallons of product might escape and be left to seep into the ground. Martin says unreported leaks and spills happen in his words all the time at Williams Sioux Falls terminal. Division manager Thornburg says Williams has not been careless in handling petroleum products at the facility, but does admit the Corporation has not been forthcoming in reporting spills over the years.

DANNY THORNBURG: I wouldn't characterize it as complying with the letter of the law. I think there have been occasions in the past where-- and I think this is typical of all petroleum operations. There has to be a judgment made on how much you report and what you do report and what you don't.

LEE AXDAHL: Thornburg is, by his own admission, not always told about every spill at the 12th Street terminal, but he also notes that this is not unusual in his line of work.

DANNY THORNBURG: I'm trying to be realistic. There are very small spills that I probably don't know about. And I think that that's typical of spills that occur on our terminals and other facilities that service stations have leaks in small piping and so forth. Other kinds of terminal operations and refineries, I think you have to recognize that being in the petroleum business, spills are going to be part of life.

LEE AXDAHL: But the fact remains that many businesses and homes in the area still depend on the groundwater under Williams Pipeline property for fresh water. When the terminal was built in the late 1940s and '50s, the location was farm country. Since acquiring the business in 1966, the city has grown up around the Williams facility. Today, the development literally surrounds the plant.

Given the opportunity again, Thornburg doubts a petroleum-handling plant would be built in such a location. Thornburg says his company plans measures to prevent further groundwater contamination.

DANNY THORNBURG: First of all, we're going to have monitoring wells completely around the terminal, on all sides, that will alert us to any contamination that might be leaving the terminal. Secondly, we're going to put in coding systems into all the tanks, such as we've already done in Tank 1341, that should prevent any further corrosion of the tank bottoms, which has led to some tank leaks.

The third thing we're doing is we're going to dig up all of our small-diameter underground piping systems and to the extent possible, put them above ground so that if leaks occur, we can see them. If we can't get them all above ground, we're going to try to put some liner or container around those piping systems so that if a leak occurred, it could be captured rather than leaking into the ground.

[MACHINE WHIRRING]

LEE AXDAHL: Darrel's auto body shop sits across the street from the Myrtle Doobie home which is adjacent to the western edge of the Williams tank farm. Darrel Johnson often thinks about Myrtle Doobie being forced from her home by the explosive concentration of fumes and fears his body shop may be next.

DARREL JOHNSON: We have one big well that sits-- the tank that leaked, it sits-- the well sits approximately 200 feet-- 250 feet from that well to the west of that tank. And that you worry if it's going to terminate that well or not because that well furnished water for a house, this business, and another business. So if that well does get terminated, there's three areas that would be terminated for water use.

LEE AXDAHL: Johnson's well has been tested with no sign of contamination, but the worries persist.

DARREL JOHNSON: We always worry about it because you never know what can happen. We have three cisterns in the building-- four cisterns in the building that collect water from the shop area, then it disperses into another cistern area, and then it goes into the sewer system. And they're set 5-foot in the ground.

If any of that gas or whatever it is gets into-- could get in that, at some mornings you could build up a-- could end up with a fume in here, and you never know what could happen when you open the shop in the morning. You just always wonder from one day to the next.

LEE AXDAHL: In addition to the health threat, Johnson says his property value has been affected by its location, across the street from Williams.

DARREL JOHNSON: I own a property right adjacent to the west of William Brothers tank farm. I own 200 feet with two big commercial buildings on it and 460 feet going north. And a year ago, I tried to get the piece of land to the north of the shop rezone and the city of Sioux Falls refused it because of the problem with William Brothers.

LEE AXDAHL: The Westwick Motel is just south of the tank farm. Motel manager Laurie Scott has been concerned about the quality of the motel's drinking water for some time. Her suspicions were confirmed in late April when tests revealed a high level of the hydrocarbon benzene. The motel was forced to limit business for one night while they switched from a private well to city water. All in all, Scott says, it's been a scary experience.

LAURIE SCOTT: We didn't know how it was going to affect us, business-wise, value-wise. Right now, we're wondering if our land is worth what we expected to be worth at this time. We were waiting to sell our land till it came into the city limits, and now that it's come into the city limits, we found out all these problems with the gas leaks. So now we have to have our property re-evaluated. And now we're waiting now to see what they say about it.

LEE AXDAHL: Scott's family has owned the Westwick Motel for the past 13 years. Her father had planned to sell the motel once the property was annexed into the city. His plans to retire on those profits probably won't happen.

LAURIE SCOTT: The land value is a real question. And my father-- we have another motel in Rapid City, too. And he has moved out there now. So now he's had to spend a lot of time back here hassling this. And it's taken a lot of time and a lot of efforts out of his days. And I guess what we're wanting to know is just where do we go from here.

SHANE MCNALLY: My name is Shane McNally. I'm 12 years old, and I go to Hayward School. Williams is hurting the environment. They are contaminating people's water, and they are irresponsible about doing what they're supposed to about solving the problems. The kids were shifted to three different school locations in one year, and now they're slowly progressing on building us a new school.

I don't like that there isn't any playground to play on. I think Williams should do immediate cleanup and keep the equipment so that there aren't-- keep the equipment up so that there aren't any more leaks.

LEE AXDAHL: Maintenance at the Sioux Falls 12th Street terminal has always been a major topic of discussion among workers, according to employee Larry Martin. He says it was widely believed the company was not keeping the plant in good repair. Martin says Tank 1341 is an excellent example of that. The tank is painted white, but streaks of rust can be seen on its sides.

Martin says a lack of proper maintenance caused workers to be concerned for their safety and contributed to some of the leaks and spills he's seen. Division manager Thornburg says there have been problems in those areas, and he says the company will change.

DANNY THORNBURG: We're going to have to put more of an effort in the safety area, in the regulatory compliance area, and in the environmental area.

LEE AXDAHL: Based on his experience working at Williams, and Martin says his opinion was shared by others, part of the problem with upkeep at the Sioux Falls terminal stemmed from an area supervisor who retired in late 1986.

DANNY THORNBURG: Bob Sandri.

LEE AXDAHL: Bob Sandri was an area supervisor at Williams. Thornburg, who was Sandri's boss, says Sandri's responsibilities were the 12th Street terminal, Williams facilities on 41st Street in Sioux Falls, and the company's Canton propane terminal, south of Sioux Falls. Martin says Sandri refused to spend money on items workers saw as essential to doing a good job.

Martin says one year, he was told Sandri spent only 62% of his maintenance budget. Martin says the unspent money was then transferred to other Williams terminals. Sandri refused to be interviewed, but did issue a written response to Martin. On the charge that he underspent his budget, Sandri notes, I don't know what year he's referring to, but further, for any year, simply because a certain amount of money is budgeted.

There's no reason why it must all be spent unless the money is needed to be spent. Martin says it should have been spent, contending his crew had to use inferior material.

LARRY MARTIN: A lot of our jobs we had out there, we had to use junk stuff laying around. They're going to have more problems with-- a fertilizer line there, we put all the old junk pipe underneath it because they wouldn't buy any. Eventually, that's going to catch up with them. And it was incidents like that and just by looking at the place, you could see it was run down since I was there, and every year was worse.

LEE AXDAHL: On the charge that inferior repair pipe was used to fix a fertilizer line, Sandri, in his written statement, responded that the pipe used was surplus pipe from Williams Fargo, North Dakota facility. He says the decision to use the pipe in Sioux Falls was a division office choice, not his responsibility. As for the overriding accusation that Sandri let the Sioux Falls terminal deteriorate, Sandri says, I can't respond any more specifically since Mr. Martin is not in any sense-specific about what he feels was neglected.

This is how division manager Thornburg responds when asked to describe the quality of work done by Bob Sandri.

DANNY THORNBURG: I don't really think that's an appropriate thing for me to comment on, obviously. Bob worked for the company. He was a very dedicated employee. He worked for the company for 45 years. I believe he's been out at Sioux Falls prior to his retirement for about the last 15 years or so, more or less. And that's all I really have to say about Bob.

LEE AXDAHL: Thornburg was also asked if it was true that Sandri consistently underspent his budget.

DANNY THORNBURG: I don't want to comment on that.

LEE AXDAHL: Martin says Williams employees had real concern for their safety, primarily due to the hurry-up atmosphere for maintenance projects. Martin says he blames Sandri but also Sandri's supervisors, including Thornburg, for what went on. Martin says workers complained to management about Sandri, but got no response.

[THUNDER ROARS]

A gentle thunderstorm rolls across the plains. Rainwater is the primary source of groundwater recharge. Groundwater has always been the chief concern of regulators at Williams West 12th Street facility since many area homeowners draw water from private wells. It's a big concern because as we've mentioned, the tank farm sits directly over the Big Sioux aquifer, Sioux Falls' primary source of drinking water.

It's a concern which makes many nervous because the aquifer is shallow. In some places, water can be found 5 to 20 feet below ground level. Because of groundwater contamination worries, many officials, including South Dakota Senator Tom Daschle, feel Williams Pipeline Company did not react quickly enough.

TOM DASCHLE: We haven't really received the kind of cooperation until it became abundantly apparent that from their point of view, it's essential that they cooperate. And when that point came, the cooperation also came.

LEE AXDAHL: A vapor study conducted by the Environmental Protection Agency last October indicated that the contamination found at the Hayward Elementary School was indeed coming from the Williams tank farm. Armed with the results of the study, the state of South Dakota issued a notice of violation. At that time, Williams Pipeline Company rejected the allegations. Water and Natural Resources Secretary John Smith.

JOHN SMITH: At the point when they denied our NOV allegations, we decided that the state definitely could not act on the assumption that they would be totally good voluntary citizens here, or we would not have committed the tremendous resources that we did to proving the allegations. And we committed three months worth of many staff members' time and a large sum of money to prove that they were in fact guilty.

LEE AXDAHL: Mary Boatwright is vice president of the Hayward PTA. She says many area parents were also concerned that the company was dragging its feet.

MARY BOATWRIGHT: I think a lot of people sort of felt like they were an untouchable entity. And you don't know who Williams is. It's an organization that lives over there. And there was nobody that was pinpointed to be even able to contact until quite later on when the name Danny Thornburg started coming up.

LEE AXDAHL: The company finally accepted responsibility for the Hayward School spill and agreed to pay for construction of a new school building. But Williams officials and school district leaders have not yet reached agreement on a final settlement. Steve Cropper is president of Williams Pipeline Company.

STEVE CROPPER: The issue of Hayward School, I want to say that we are proceeding with as much speed as we possibly can to get a satisfactory resolution of that matter.

LEE AXDAHL: Division manager Danny Thornburg, also speaking at a public hearing to address concerns of area homeowners, echoed Cropper's remarks.

DANNY THORNBURG: We have worked with the school district here in Sioux Falls. And we're very close to finalizing an agreement with the school district that will pay for a brand new school and that will pay basically everything they have asked for. What was our alternative? We could have said, all right, sue us.

LEE AXDAHL: In addition to its negotiations with the school district, the company is also trying to settle with state and city officials over cleanup and containment efforts.

DANNY THORNBURG: I think in our dealings with the city and the state, we haven't forced them to sue us and strung this thing out for years and years. We've sat down and been very honest and open with them. We've given them every single piece of paperwork or record that we have in our files. We haven't kept anything secret.

We've said, sure, we're going to cooperate fully. And we have cooperated fully.

ANGIE EVENSON: My name is Angie Evenson. The name of-- my title is Williams Pipeline. I feel that Williams should clear everything up. Most homes by Hayward are going down in price. There has been gas leaks all over town and in Iowa. I don't feel too happy about it. Junior High is not a fun school to go to, and I'm sure kids that go to School for the Deaf and Central Baptist are not too happy.

LEE AXDAHL: Throughout our investigation for this report, we contacted many Williams employees, including those still working at the terminal and some who have retired or quit. Most would not talk. They all feared for job security if they discussed anything with us. And they all have strong incentive to remain with Williams. It is one of the highest paying employers in the city. Most workers earn more than $30,000 a year.

Larry Martin is still recovering from burns suffered last summer in the Milford explosion and is not in the category of fearing for his job. He simply believes he will not return to work with Williams.

LARRY MARTIN: I don't really want to go back to work for them. I don't know if I'll be able to go back to work for them anyway, so. And I don't really want to because of the accident that happened, and I'm scared it might happen again or something similar to it. I'm gun-shy now. I don't like smell of gas or wondering anymore.

LEE AXDAHL: Martin says his primary motivation to talk is because of the people still working at Williams. He hopes his statements have an impact on Williams management.

LARRY MARTIN: I hope it wakes them up and start having etiquette help for the jobs and the safety procedures about it.

LEE AXDAHL: Former Williams employee, Barb Griffith, feels much the same way, noting that she left the corporation because it was an unsafe place to work.

BARB GRIFFITH: When I quit, I quit because I feared for my life. The reason I gave them was conflicting morals. I expressed an opinion to them that I believed they had no regard for human life.

LEE AXDAHL: Griffith also wants the company to upgrade its safety program.

BARB GRIFFITH: The reason why I'm talking now to a radio station or to anybody else is because I have a lot of friends who work in the field for the pipeline. And I want to see a big company mend their ways. I don't want to read in the paper anymore about any of my friends getting killed.

LEE AXDAHL: Manager Danny Thornburg concedes that workers' safety is but one category which must be addressed by his company. He says Williams Pipeline will have to spend some money to upgrade its safety program.

DANNY THORNBURG: Our company is faced with a big challenge in not only the environmental area, which is obvious, I think, to everyone, but also in the safety area, which may or may not be obvious to everyone. I think it's obvious internally to most of the people in the company.

LEE AXDAHL: Thornburg also reassures workers that they will not be fired for coming forward with factual information.

DANNY THORNBURG: We don't punish people that are telling the truth. And we don't tolerate cover-ups of substantial information. And certainly, we're not going to take any punitive action against those kind of people. I think we've demonstrated that we're always open to any communication that we can get, whether it goes through the direct supervisor or not.

LEE AXDAHL: Several workers we spoke with also noted concerns about the Williams 12th Street facility closing down. They feared the media coverage would force the company out of town or that federal investigators would shut the terminal down. Thornburg, however, says the plant will stay open.

DANNY THORNBURG: I'm not worried that the facility will be shut down. I think it's an essential facility that serves this area. The alternative to having our terminal here is to really have trucks be brought in from long distances and haul petroleum into this area because the other existing pipeline terminals, there's only one other one in town here, and there's one in Rock Rapids, Iowa, don't have the capacity to serve this area.

LEE AXDAHL: The Williams problems in Sioux Falls have caused local, state, and federal officials to take a closer look at the question of pipeline and tank farm safety. One of the problems facing officials is who exactly has jurisdiction over Williams terminals, its nearly 7,000 miles of pipeline nationwide and its spills. One specific regulatory problem showed up in the Tank 1341 spill.

The Federal Environmental Protection Agency is empowered to regulate below-ground storage tanks, but not above-ground tanks, like 1341. Williams, in fact, recently, initially refused to let the EPA onto its property for an inspection of the 12th Street terminal. South Dakota Senator Tom Daschle wants to change the EPA legislation to allow for tougher controls.

TOM DASCHLE: All above-ground tanks are exempt from current EPA legislation for the most part. For the life of me, I can't understand why. It seems to me that if you have serious problems with below-ground tanks, the problems could easily exist above ground as well, but they're treated differently. My legislation, even though it's more complicated than that, basically would provide the same kind of environmental protection for tanks of all kinds.

LEE AXDAHL: While we attempted to have officials at the Federal Transportation Department's Office of Pipeline Safety go on record, they refused, pending a conclusion to their investigation of Williams. The office is looking into the company's record and the problems it has caused for Sioux Falls and other communities.

The South Dakota Water and Natural Resources Department says, in the past six years, there have been 10 pipeline spills in the state. Nine have occurred at Williams facilities. The Office of Pipeline Safety has acted against Williams in the past, especially in Minnesota, where it's issued a half dozen citations against the company since 1981.

The Office of Pipeline Safety does have its critics, though, some congressmen, like Minnesota Eighth District Representative James Oberstar, say the office is not a watchdog agency, as it should be. Rather, the legislators feel it sympathizes with oil and pipeline companies more than it protects the public.

[CARS WHOOSHING]

While government officials argue the issue of pipeline safety along 12th Street in Sioux Falls, the question is, when will action be taken? Homeowners and businesses, school children and parents are worried about the future. Residents of the Hayward neighborhood have organized. They've begun a watchdog group of their own to study damage and liability issues.

They've retained two lawyers, including a former South Dakota attorney general. Hayward residents, including Bob Saretzki, feel there is no certainty to their lives, as long as their groundwater is contaminated. It's been estimated the 1341 spill could take as long as 10 years to clean up. While Saretzki says he expects more problems, a schoolgirl worries, and Williams Sioux Falls division manager Danny Thornburg admits things need to be changed.

DANNY THORNBURG: They won't fade away because I think the area is going to stay the same. They've been here for 40 years. They've had been here, and now that they're getting older, the problem is still there. And what's to say in 10 more years that the problem won't be worse?

KATIE: My name is Katie. The school I go to is Hayward. Right now, I'm scared because I'm afraid the gas might pollute the water in our area, or if something happens and the tanks would blow up.

DANNY THORNBURG: My family and I have lived in the Sioux Falls area for nearly five years. And I have been personally embarrassed by what's happened here because I'm responsible for this area. Up until the last year, our company was largely anonymous, and we enjoyed a good reputation among the people that did knew what we did and so forth.

The incident in Mounds View, Minnesota, the tank explosion in Milford, Iowa, these recent environmental problems that we've had have really shed us in a very poor light. And I just want the audience to know that I'm personally committed, as well as our company, to making sure that we take care of the problems here in Sioux Falls as well as to prevent future occurrences.

LEE AXDAHL: Williams Pipeline Under Fire, The South Dakota Story was researched, written, and produced by Tammy Armstrong and Mark Steil. I'm Lee Axdahl.