Nossaman Secures $100 Million Settlement for Cleanup of Contaminated Water

05.02.2007

An estimated $100 million settlement has been agreed to today and will allow for clean up of perchlorate contaminated groundwater in Los Angeles County. Attorney Fred Fudacz and his team at Nossaman Guthner Knox & Elliott LLP successfully represented Santa Clarita Valley water agencies in a lawsuit against the current and past owners of a former munitions production site in Santa Clarita Valley.

The following press release was issued jointly today by Castaic Lake Water Agency, Newhall County Water District, Whittaker Corporation, the City of Santa Clarita and the Valencia Water Company and in collaboration with Nossaman.

Santa Clarita Valley Water Agencies Approve Bermite Settlement

SANTA CLARITA (May 2, 2007) - Castaic Lake Water Agency, Newhall County Water District, Santa Clarita Water Company and Valencia Water Company have settled their lawsuit against the current and past owners of the former Bermite industrial site and approved a settlement agreement to remove perchlorate from the Santa Clarita Valley's groundwater aquifers. The water agencies estimate this settlement, when added to past settlements, provides up to $100 million.

These water agencies filed the lawsuit in November 2000 after perchlorate was discovered in five wells that were immediately shut down. The water agencies contended the pollution came from the former Bermite site located in the City of Santa Clarita. The 996-acre site was used for decades to manufacture dynamite, fireworks and munitions. Perchlorate compounds are used in the manufacture of explosives, munitions and rocket fuel.

The settlement agreement provides funding to construct replacement wells, pipelines, and a treatment plant to remove perchlorate. The settlement also provides funds to operate and maintain the system for up to thirty years, which the water agencies estimate to cost as much as $50 million. The treatment plant is already under design by the water agencies and the agreement provides almost $12 million to reimburse the agencies for past expenditures. In addition, a $10 million "rapid response fund" will be established to allow the water agencies to immediately treat any additional wells that could become impacted by perchlorate contamination in the future.

The agreement calls for the water agencies to seek grant funding, such as money made available by the Department of Defense, to pay for the federal government's fair share of monitoring, treatment and other costs not covered by the agreement.

On August 28, 2006, Congressman Howard "Buck" McKeon, local dignitaries, and community leaders attended a groundbreaking for the facilities that will be constructed to pump and treat groundwater contaminated with perchlorate. During the past seven years, Congressman McKeon has been instrumental in obtaining $10 million from Congress to assist in the perchlorate clean-up. He stated, "I am pleased the water agencies have reached a substantial agreement with the Bermite site owners to ensure the financial impacts of the clean-up are not borne by local residents and ratepayers. My office stands ready to offer additional assistance with the federal government as needed in the clean-up of this critical water source for the residents of the Santa Clarita Valley."

"The really good news is that the settlement protects our groundwater supplies and the cost of the treatment will not be borne by the residents of the Santa Clarita Valley", said William Pecsi, President of the CLWA Board of Directors. "The water agencies are now poised to implement a sophisticated treatment plan approved by the Department of Toxic Substances Control, and in cooperation with Whittaker Corporation. Our proactive approach will also contain, as well as treat, the contamination and ultimately restore our impacted groundwater production capacity."

Randall Pfiester, President of the NCWD Board of Directors, added, "I am pleased the community will benefit from this renewed source of drinking water. This settlement allows us to use existing proven technology to build groundwater purification facilities to restore groundwater production. Equally exciting is being able to, in a number of years, remove or isolate perchlorate from the Valley's groundwater aquifers."

Eric Lardiere, Vice President and General Counsel of Whittaker Corporation, stated, "We are pleased to bring this negotiation to an end on a cooperative and amicable basis. Whittaker has worked well with the CLWA and the water retailers over the last four years and intends to continue."

"The City of Santa Clarita is pleased that a resolution has been reached among the parties. Efforts can now be focused on implementation of the groundwater clean-up and restoration of our groundwater production capability," said Bob Kellar, Mayor Pro-tem, City of Santa Clarita.

Funded by Whittaker Corporation, Remediation Financial, Inc., Santa Clarita, LLC and their insurers, the settlement is still subject to the approval of the Bankruptcy Court as the current site owners had filed for bankruptcy in 2002. Fred Fudacz, a partner at Nossaman, Guthner, Knox & Elliott, counsel to the water agencies, believes that court approval will be forthcoming. "This is a significant achievement that the court will approve. The settlement agreement will protect the Valley's groundwater resources, providing full funding for that effort in a cooperative, cost-effective manner. All involved can be justifiably proud."

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