Merced to pay $1.5M in contamination case

Source: Merced Sun-Star (CA), July 15, 2011
Posted on: http://envfpn.advisen.com

The city of Merced will pay $1.5 million to more than 2,200 plaintiffs as a settlement in the 4-year-old Beachwood contamination and flooding case, in which residents alleged a plant near the neighborhood contaminated the air and water around them.

The plant used industrial chemicals to pressure-treat wood for cooling tower frames.

The authorization to spend the money was included in the approval of the city’s budget last month, according to city attorney Greg Diaz. The decision to settle came out of closed session and was finalized and reported in May by the Merced City Council, according to Diaz.

The case was filed in Fresno federal court against the city, pharmaceutical company Merck, Merced County, Franklin County Water District, the Merced Irrigation District and others in late 2006, he said.

The residents claimed contaminated water from city sewer lines entered Black Rascal Creek and reached their properties, according to Diaz. In addition, residents were seeking compensation for damage caused to their properties by floodwater in 2006.

The first phase of the three-part trial wrapped up at the end of March. A federal jury found the cancer-causing chemical hexavalent chromium migrated into Merced’s Beachwood neighborhood via the air and a canal, but not through groundwater. Hexavalent chromium is the same substance made famous in the movie “Erin Brockovich.”

Diaz said the allegations among the multiple defendants varied. The case will continue for at least another year for some of them, he said.

Along the way, there were some hiccups in how the city was going to pay for its defense costs. Diaz said the city had been spending $1 million a year for lawyers and experts that was being covered by the city’s insurance.

But in April, on the eve of the trial, the lead insurance carrier for the city pulled out. “They reviewed their policies and didn’t believe it (was) covered,” he said. “We certainly disagree and (they shouldn’t) do that at the last minute.”

To come up with the necessary money, the city decided to use sewer funds and reimbursements from the insurance carriers, which it had in a separate account, he said. That way, if the city had to make a settlement, there would be money to do so.

The city hasn’t written a check to the plaintiffs, Diaz said, because they have to complete some legal paperwork.

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