The discharge from the tank spilled into a stream that flows down to Carbis Bay beach. Cornwall Fire & Rescue Service said the spill released hydrogen sulphide which had caused the breathing problems.
The hotel argues that to remove concrete slabs and foundations could lead to the risk of a landslide and be hazardous to people using Carbis Bay beach and the neighbouring South West Coastal Path.
A new luxury resort in a popular coastal region in the UK will go-ahead despite mounting opposition from locals.