After six years of study, lawsuits and negotiation, the case of
the gasoline additive MTBE escaping into an underground aquifer
from a leaky fuel tank has come to a conclusion, bringing with it
some welcome funds
– $1.575 million – for the school district and the city.
Remediation efforts using a treatment plant and monitoring wells,
begun in 1996, are ongoing and expensive, according to Public Works
Director Jim Ashcraft. He estimated the total cost of cleaning the
aquifer will be more than triple the
settlement. The lawsuit was filed against Minter
&
amp; Fahey, the construction firm that installed the piping and
tank system in 1987 at the joint City of Morgan Hill/Morgan Hill
School District corporation yard on Edes Court. School buses and
city vehicles fill up with fuel on site. The piping failed sometime
before 1995 when it was discovered, allowing the chemical to enter
the groundwater, forcing expensive clean-up efforts.
After six years of study, lawsuits and negotiation, the case of the gasoline additive MTBE escaping into an underground aquifer from a leaky fuel tank has come to a conclusion, bringing with it some welcome funds – $1.575 million – for the school district and the city.
Remediation efforts using a treatment plant and monitoring wells, begun in 1996, are ongoing and expensive, according to Public Works Director Jim Ashcraft. He estimated the total cost of cleaning the aquifer will be more than triple the settlement.
The lawsuit was filed against Minter & Fahey, the construction firm that installed the piping and tank system in 1987 at the joint City of Morgan Hill/Morgan Hill School District corporation yard on Edes Court. School buses and city vehicles fill up with fuel on site. The piping failed sometime before 1995 when it was discovered, allowing the chemical to enter the groundwater, forcing expensive clean-up efforts.
City and district sued over the contamination, discovered in 1997, and lost the case in a three-week jury trial. In July 2003, however, Santa Clara County Superior Court Judge Leslie Nichols awarded $2.2 million, allowing a breach of contract claim because the company had promised to indemnify the city/district and didn’t. This week’s final negotiation offered $1.575 million, which the district and city accepted.
However, Minter and Fahey said they could not afford to pay and, since that time, the company’s three insurance companies have negotiated over payment.
“One company only had a one-year policy and the leak didn’t occur then,” said Helene Leichter, city attorney. “Another had a pollution exclusion clause.”
Leichter said the city will get one-third of the $1.575 million settlement from the insurance companies and the school district two-thirds.
“We are very pleased that we will be recouping our attorneys’ fees and part of the cleanup costs,” Leichter said. “It was a good settlement for all parties.”
Deputy Superintendent Bonnie Tognazzini said the district had a specific limit of what it would accept.
“The $1.575 million was very close to what the board felt would settle the case,” Tognazzini said Thursday. She said she was grateful to the jury, even though it found against them, because it allowed the district/city to establish the cost of the leak.
“It will take at least $4 million more to continue to treat this problem continually for 10 to 14 years,” she said. “But I’m pleased; we put in a phenomenal amount of time because we were convinced that restitution was due after an almost seven-year process.”
The state has reimbursed the city and district the maximum of $1.5 million to help with the cleanup from a program called the state underground storage tank clean up fund. City Finance Director Jack Dilles said the money will not have to be repaid.
“The state does have a requirement that if we get money from any source, we have to give it back,” Dilles said. “But the ongoing costs of cleanup are double what we will receive from the legal settlement.”
Leichter said the money only must be reimbursed if they make a double recovery.
Ninety-nine percent of clean up costs were paid for by the city who then billed the school district for its two-thirds.
No particular city fund will receive the entire amount; instead, money will return to budgets previously charged, said Ed Tewes, city manager.
“The responsibility (for paying cleanup costs) is in proportion to the use of fuel,” Tewes said. “To meet the expenses we have charged the departments that used the fuel.” Some expenses were charged to the general fund because the police department is covered under the general fund; others, such as the water fund, are not. In any case, the cleanup continues and will ultimately cost the city and school district more than the state reimbursement and the settlement award.
Leichter announced the case’s settlement after a closed session following Wednesday’s council meeting. Mayor Dennis Kennedy had not heard the news until Thursday because he was in Washington, D.C., lobbying Congressional representatives to get the president to replace flooding and perchlorate remediation funds.
“This is great news,” Kennedy said. “I’m happy to hear it.”
The district’s case was argued by Mark Strombotne of the Strombotne Law Firm.
Methyl Tertiary Butyl Ether (MTBE) has been used at low levels in U.S. gasoline since 1979, replacing lead as an octane enhancer or anti-knock product.
Low levels of MTBE can make drinking water supplies undrinkable due to its offensive taste and odor and it is considered to be carcinogenic.
Public Works Director Ashcraft said the aquifer under Edes Court is essentially small and closed, not extending to any private wells. The plume 2,000-foot by 500-feet plume is confined.
A carbon absorption water treatment plant has been operating in front of the gas pumps, on and off, since 1997, and upgraded in 2003, said Ashcraft; three monitoring wells were installed to help monitor the water, at a cost of $75,000.
“This will continue for five to 10 years,” Ashcraft said. It costs $80,000 to $100,000 a year to operate plus quarterly monitoring reports costing $25,000 to $30,000 a year, he said. “As of December 2003 the clean up has cost a bit over $2 million, $1,345,000 paid by the school district and $661,000 paid by us.”
Dilles said exact estimates of future costs are still being discussed by several experts and are uncertain.
