The complaint against U-Haul stemmed from an explosion and two-alarm fire that burned the hands and face of an employee at U-Haul's Santa Rosa facility on Nov. 16, 2004.
The emergency response team that arrived had trouble assessing the situation because of a lack of information by U-Haul employees about stored hazardous materials, the California Attorney General's Office said.
The Santa Rosa facility did not have a map indicating where hazardous materials were stored and employees failed to properly label flammable materials, including gasoline, according to the Attorney General's Office. The damaged building was eventually closed.
The incident started a two-year investigation prompted by the Sonoma County District Attorney's Office. The state Attorney General's Office and seven other county district attorney's offices joined the suit seeking penalties and a permanent injunction to enforce compliance with hazardous materials and waste laws.
The complaint was filed in Alameda County Superior Court. Other Bay Area counties involved include Solano, Alameda, San Francisco and Santa Clara.
"U-Haul has turned a blind eye to California's hazardous materials laws for years, even after and explosion and fire severely damaged one of its facilities," Attorney General Jerry Brown said in a prepared statement.
"This agreement forces U-Haul to clean up its act and improve the way it handles hazardous materials, plans for emergencies and trains employees," Brown said.
"This action shows U-Haul, and other businesses, that prosecutors will act to assure that proper planning occurs to reduce the risk of injury both to the public and to emergency first responders," Sonoma County District Attorney Stephan Passalacqua said.
Under the settlement, U-Haul will pay $ 1 million in penalties and $1 million in costs.
It also must properly transport hazardous waste, inspect hazardous waste storage areas weekly, train employees how to properly handle hazardous waste materials, submit annual reports on compliance efforts and maintain hazardous waste business plans and emergency response plans.