San Gabriel Basin Water Authority, Other Agencies Finalize $250 Million Groundwater Cleanup Deal

March 29, 2002

Aerojet-General Corporation and seven other companies have agreed to buy insurance in connection with $250 million in cleanup facilities that will remove contaminants from the San Gabriel Valley's groundwater, the San Gabriel Basin Water Quality Authority announced.

The insurance is the final piece of the puzzle necessary for the companies and the valley's water agencies to sign a comprehensive agreement to clean up the water and ensure a reliable drinking water supply in the Baldwin Park-Azusa area. The parties are scheduled to sign the $250 million deal on Friday.

"We are pulling into the station after a very, very long ride," said Bob Kuhn, chairman of the Water Quality Authority (WQA) Board of Directors. "This agreement ensures that local water rate payers will not bear the burden of the cleanup costs."

The Baldwin Park-Azusa area is the largest of five San Gabriel Valley areas placed on the federal Superfund list by the U.S. Environmental Protection Agency after traces of industrial contaminants were detected in the groundwater. Since then, migrating plumes of underground contamination have steadily forced the closure of more than 30 of the valley's water supply wells.

"I won't claim victory until we sign this deal on Friday, but I feel more confident than ever that we will finally get a deal," said WQA board member Ken Manning. "We owe a debt of gratitude to Congressman David Dreier, Senator Barbara Boxer and the members of the San Gabriel Valley congressional delegation."

Both legislators played a significant role in ensuring that there would be a comprehensive cleanup agreement. More specifically, Rep. Dreier, R-San Dimas, assisted in getting $85 million in federal funds earmarked to help with the cleanup, and Sen. Boxer, D-California, helped to keep the deal alive when it was threatening to fall through last December.

"I am thrilled to see this landmark agreement reached so that we can move forward in our efforts to clean up the water for the residents of the San Gabriel Valley," said Congressman David Dreier. "I salute all the parties involved for reaching this milestone and am pleased that my legislation helped to serve as a catalyst to bring this day to reality."

Kuhn also credited U.S. EPA Administrator, Wayne Nastri, for EPA's role in facilitating the negotiations by keeping all parties at the table. "Mr. Nastri's fresh perspective and 'can do' attitude helped guide the process," he said.

Aerojet and the other companies, Azusa Land Reclamation Co. Inc., Fairchild Holding Corp., Hartwell Corp., Huffy Corp., Oil & Solvent Process Co., Reichold Inc and Wynn Oil Co., agreed in late January to fund the $250 million cleanup. But the deal wasn't signed pending resolution of the insurance and several other side issues.

The parties reached agreement this week on the insurance and other issues, with the companies agreeing to fund the more than $5 million policy premium, which will be provided by CHUBB Group of Insurance Companies.

After the signing Friday, the deal still must be approved by the Los Angeles County Superior Court judge responsible for adjudicating water rights in the valley. But WQA officials expressed confidence that the approval would be forthcoming. The judge's approval is needed in order to secure the participation of the Main San Gabriel Basin Watermaster.

After years of study and investigation, the U.S. Environmental Protection Agency identified Aerojet and 19 other Responsible Parties as the source of the contamination in the Azusa-Baldwin Park area. Aerojet was identified as the source of the largest quantity of contamination. It took several more years for EPA to designate an acceptable comprehensive cleanup project.

The WQA, the Main San Gabriel Basin Watermaster, and the water purveyors have maintained from the start that the polluters should pay for the cleanup and that the clean water, which meets all state and federal drinking water standards, should not be wasted but used to replace the water supply that had been lost due to contamination.

In late 1999, Aerojet and 11 other Responsible Parties made a good faith offer to fund the cleanup, but negotiations broke down nearly a year later. The EPA then issued an enforcement order and directed the polluters to start preliminary design and construction in the absence of an agreement while efforts were made to restart the talks.

Meanwhile, the WQA and other water providers sued Aerojet to recover public funds they had already spent on emergency cleanup facilities. In January 2001, Aerojet and others made a $4 million payment to WQA and other water providers and agreed to resume negotiations for a comprehensive agreement.

In addition to Aerojet and the seven others who agreed to the deal, there are eleven Responsible Parties identified by the EPA in the Azusa-Baldwin Park area who refused to participate in the negotiations. They remain at risk for legal action by other parties to recover a fair share of the project costs.

The California Legislature created the San Gabriel Basin Water Quality Authority in 1992 to coordinate and accelerate the cleanup. The WQA has generated $65 million for cleanup projects, including $12 million in government grants and $13 million from potentially responsible parties who entered into settlement agreements to pay a share of the cleanup.

Urgency projects completed with WQA participation have removed 10 tons of contaminants from the basin, more than half of all contamination removed since 1979. But this is only a small portion of the total contaminants that will be removed by the cleanup facilities outlined in the EPA's cleanup plan for the Basin.

Source: San Gabriel Basin Water Quality Authority

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