When a petroleum tank overflowed and spilled 300,000 gallons of gasoline at the Fairfax Tank Farm last May, few people grasped the full danger at first.

Gradually, though, as nearby residents were evacuated and fire trucks moved in for a round-the-clock vigil, citizens and city officials realized that not only could the massive gasoline puddle ignite, but the fumes drifting from the storage depot also could explode.

No one was injured in the incident--the second serious accident since 1977 at the tank farm on Pickett Road--but the potential danger was strong enough to prompt the Fairfax City Council to pass an ordinance in September requiring sophisticated alarms on all tanks in Fairfax City storing flammable liquids and setting penalties for violating the new regulations.

But the city is thinking of changing the ordinance, and that worries some residents who live next to the tank farm.

"It would do the whole community a grave injustice if restrictions that were finally imposed were eased in any way," said Barbara Naramore, whose home overlooks the huge white storage tanks. "It took two serious accidents for the city government to do something, and if they lifted those restrictions for the benefit of the oil companies, it would be very, very unfortunate."

The four oil companies that own and use the tank farm were not happy with the regulations and began to talk about suing the city over the legality of the ordinance. To avert a lawsuit, Fairfax city staff started negotiating with the oil firms.

Now the issue is on the table again as the council tries to hammer out an ordinance acceptable to both the oil companies and the residents.

Suggested changes, which the council will consider at a public hearing Tuesday night, still require the oil companies to install sirens and flashing lights that would go off 10 minutes before a tank could begin overflowing. But the penalty for violating the ordinance and the revocation of hazardous use permits would apply only in cases resulting in the "loss of life, limb and property" rather than when "any intentional violation" occurs, as the ordinance now stipulates.

The amendments also create an appeal process so oil companies and residents can challenge guidelines set by the city's fire marshal for enforcing the ordinance. Now there is no provision for appeal.

"The first ordinance had an awful lot of arbitrariness in it," said Rodney Buckles, an attorney for Cities Service Co., one of four oil companies using the tank farm. "We saw what could be an almost arbitrary lifting of hazardous use permits without the right of appeal."

Buckles said he thinks the revised ordinance still has flaws, but he said the oil companies are satisfied enough not to file a lawsuit against the city because of it.

"If we were writing it, there are further things that would be helpful," he said. "On the other hand, there is such an improvement in what the city came up with the second time that many of our objections were overcome." Buckles said the problems included the lack of an appeals process, the identification of an oil company owner as the person liable for an accident rather than the tank operator and a few disagreements about technical wording.

The need for alarms was not questioned by the oil companies using the storage site. Cities Service, Amoco and Gulf already have complex alarms on their tanks and Texaco has promised to install the required alarms by March.

The alarms at the Amoco facility were malfunctioning, however, when the gasoline spill occurred there last May, city officials said. As a safeguard against that happening again, one provision of the current ordinance requires regular inspections by the fire marshal to make sure the equipment is operating properly.

Although the oil companies seem appeased by the suggested amendments, some residents of the nearby Comstock town house complex fear the city is backing down on its effort to tighten safety precautions at the tank farm.

Steve Elder, president of the Comstock Home Owners Association, said the civic group disagrees with several changes in the ordinance and has offered its own recommendations. One amendment the group wants would penalize tank operators for accidents that "endanger" property or lives as well as those that result in the loss of life and property.

"We believe this is to be a critical addition," Elder wrote in a letter to the city council. "In the gasoline spill in May, fortunately no property or lives were lost. . . . However, we believe all would agree that property and lives were very much endangered by the 300,000-gallon spill."

"We're not out to get the oil companies, but we have to look at anything that affects us," Elder said.

Acting City Manager Robert Norris said the homeowners are entitled to their concerns, but he added: "They have one of the safest tank farms in the East Coast of the United States behind them."

Norris cited the tank farm's elaborate fire-smothering foam system as one example of the safety devices at the facility. The foam system was installed following a 1977 tank truck explosion at the site in which one truck driver was killed and five other truck drivers and two firefighters were injured.

The tank farm is a storage depot for oil companies using the Colonial Pipeline, a 1,675-mile pipe from the Gulf of Mexico to New York Harbor. The pipeline feeds gasoline, fuel oil, aviation fuel and kerosene into the tanks, and trucks pick up fuels at the farm for deliveries throughout the area.

Although many residents in the 243-unit town house complex on the tank farm's southern end say they are wary of the sprawling facility, few feel panicked by it. The Comstock residents have been the most vocal in the tank farm debate, although homes in the Little River Hills development also border the terminal, as does the Fair City Mall.

"I am concerned about the tank farm and I am concerned about the safety measures," Elder said. "But I do not live in constant fear of it. I don't know anyone who does."

To some extent, the tank farm has become an image problem for both the homeowners and the oil companies.

Comstock residents have tried to keep a calm, low profile throughout the debate, fearing that too much attention drawn to the tank farm location could lower their property values and scare away potential home buyers. So far, Elder said, home prices have not suffered, rising from about $50,000 when the development opened in 1975--10 years after the tank farm opened--to between $88,000 and $100,000 today.

"Amazingly, with all the publicity, it has never done permanent damage to the home value," Elder said. "But if it kept coming up, eventually it would."

Similarly, the tank farm operators are anxious to allay fears about the terminal, and public relations spokesmen for the oil companies have become well-versed in the tank farm's safety features.

On Tuesday, as part of its campaign to present itself as a "good corporate citizen," as Cities Service terminal manager Allan Witham put it, Cities Service conducted a tour of its facility for City Council members and citizen leaders.

Several people on the tour said they were impressed with the ultra-violet fire detectors, security cameras, fire-suppressing foam system, clanging alarm and other safety devices at the Cities Service plant. But after the tour, they were not all convinced that the tank farm is accident-proof.

"The fact that there are mechanical safeguards and safety procedures certainly raises everyone's comfort index," said Councilman John Perrin. "But the ordinance ensures that noncompliance with these procedures will result in consequences that will both deter careless acts and ensure there won't be operation (of the tanks) until the violation is straightened out." Perrin has said some of the proposed amendments could gut the law.

"I think they've attempted to be forthcoming," he said. "But things can still go through the cracks because human beings are involved."