The City of Morgan Hill is about to enter into a binding
agreement with the City of Gilroy and two other public agencies
that represent perchlorate-affected constituents. The agreement
opens the door to joint litigation against Olin Corp., the company
that contaminated South Valley aquifers with the toxic chemical
from 40 years of manufacturing road flares at its Tennant Avenue
plant.
The City of Morgan Hill is about to enter into a binding agreement with the City of Gilroy and two other public agencies that represent perchlorate-affected constituents. The agreement opens the door to joint litigation against Olin Corp., the company that contaminated South Valley aquifers with the toxic chemical from 40 years of manufacturing road flares at its Tennant Avenue plant.
Morgan Hill, Gilroy, Santa Clara County and the Santa Clara Valley Water District are soon expected to sign a so-called prosecution/defense confidentiality agreement. The agreement will allow the agencies to share, among other items, the following things:
• documents, factual material and memoranda
• mental impressions (for instance, legal interpretations)
• interview reports
• litigation strategies
By signing the agreement, the agencies – which already sit on a perchlorate working group together – can exchange information without violating or waiving attorney-client privileges.
“This agreement memorializes our willingness to work together to address perchlorate issues,” said City Manager Ed Tewes.
“Eventually we will all be seeking reimbursement for all perchlorate-related costs,” said Tewes. “We hope this can be done without litigation, but that is always a possibility. With this agreement we can all work together and keep our strategy confidential.”
Morgan Hill is also working independently with attorney Stephen Hoch to reclaim its costs accrued for building a well to replace the Tennant Avenue well across the street from the former Olin Corp. safety flare plant, the source of South Valley groundwater contamination by perchlorate.
Meanwhile, the Morgan Hill City Council is heading toward increasing water rates significantly to cover its unexpected and unbudgeted perchlorate-related expenses. It won’t, however, take action until after a workshop on the issue set for Jan. 21, 2004.
Jack Dilles, finance director, told the council Wednesday night that costs through June 2007 are estimated at $34.4 million, or $3.1 million more than expected and that an additional 6 percent rate increase – added to the expected 2 percent increase as of April 1.
Water customers may eventually get a break if Olin Corp., the source of the perchlorate contamination, repays the city for having to install and pay for a perchlorate treatment system on its Nordstrom well and for having to shut down four other wells.
Dilles said that, if Olin Corp. reimburses the city and if the water fund reserves are considered adequate, ratepayers could get a credit on their bills or a temporary reduction in rates.
Tewes agreed with Gilroy City Administrator Jay Baksa, who said each party would be responsible for its own legal counsel and the agreement simply allows those attorneys to communicate more freely.
The source of South County perchlorate contamination is a now defunct road flare factory in Morgan Hill which used to be operated by Olin Corp. Perchlorate, a salt that is harmful to thyroid function, is a main ingredient in flares and rocket fuel. It has been found in roughly 450 private wells in Morgan Hill, San Martin and Gilroy.
The two cities and San Martin use only wells as a drinking water supply. Tewes told the council Wednesday night that all operating wells in Morgan Hill recently tested “nondetect” for perchlorate.
“The chemical tends not to be present during winter months,” he said. Possibly the lower amount of pumping during the rainy months is responsible, he said.
More information on Morgan Hill’s water rates and the local perchlorate contamination can be found at www.morganhilltimes.com
