April 16, 2003 – The 3rd Circuit Court of Appeals has upheld District Court approval of a consent degree entered into by Texaco Caribbean Inc. and Esso Standard Oil to pay a total of nearly $9.3 million in settlement of a claim for natural resources damages stemming from contamination of the Tutu Wells aquifer.
The claim was filed by Planning and Natural Resources Commissioner Dean Plaskett in his capacity as trustee for the territory's natural resources.
Three entities referred to by the court as Laga Properties had refused to enter into the settlement agreement. These three had appealed the October 2001 District Court approval on the grounds that the consent decree was arbitrary and unreasonable in its assessment of damages.
The amounts agreed to by the two settling parties under the consent decree were:
– a 38.89 percent share, or $6.1 million from Esso.
– a 26.98 percent share, or $3.195 million from Texaco.
Laga Properties was assessed a 19.84 percent share in the proposed settlement.
The consent decree settlement was based on "the volume and toxicity of the parties' contamination, their financial resources, and their degree of cooperation," according to the Circuit Court opinion.
After legal expenses, Plaskett said, somewhere between $7.2 and $7.9 million is expected to end up in a special account that will be used to "enhance the environment."
Plaskett said Wednesday his department has already been approached about funding for several projects, including potable water lines on St. Thomas and St. Croix and help for the territory's hospitals in switching from the current incineration waste-disposal system to a more environmentally sound process.
Whatever the money is used for, Plaskett said, it will not get lost in the General Fund. District Judge Raymond Finch "made it clear it will go into a separate account," he said.
Finch was the presiding judge in the District Court case.
Under a contract dating from the Schneider administration John Dema, the attorney representing the V.I. government, was to receive 30 percent of any settlements, plus expenses. But Plaskett said he expects that arrangement to be "negotiated."
Experts hired to assess the losses also must be paid out of the settlements.
Losses set at $35.9 million
According to court documents, Industrial Economics, a firm hired to assess the damages, calculated two types of losses:
– Use-related loss, representing the cost to rehabilitate the contaminated aquifer, which the company set at $16.9 million.
– Non-use-related loss, representing the lost value to the public from the inability to use the aquifer, which the firm set at $19 million.
The assessment was reviewed by two other experts, and in 1999 a settlement conference was held. All parties accused in the government's suit of having contaminated the wells participated in that meeting. After that, Laga Properties refused to participate in any further settlement negotiations.
The Tutu Wells litigation has gone on for years, and Plaskett is clear that it is not over.
"We intend to pursue Laga and L'Henri," he said.
L'Henri Inc., doing business as O'Henry Cleaners — a dry cleaning and laundry facility — is another of the companies named in Plaskett's claim for damages.
Plaskett said settlement by Texaco and Esso could bode well for a settlement with Laga and others.
LAGA Textile Co. and Panex Co., both clothing manufacturing firms, operated between 1969 and 1982 at one site of contamination — where the Education Department's Curriculum Center is now housed. The federal Environmental Protection Agency determined that the manufacturing companies contributed to the groundwater contamination – some feel in a major way.
"Most of the pollution more than likely came from them," Plaskett said.
"Based on the plume," he said, "it appears a significant portion" of the pollution came from the area where the manufacturing plant stood.
The company liquidated its assets years ago and claimed in response to the lawsuit that it had no funds. But Plaskett said there were stockholders, and "it's not like they were broke when they disintegrated."
He is hoping the Laga parties will now be ready to negotiate a settlement to avoid ongoing legal costs.
Court action dates back 16 years
The Tutu Wells matter goes back to 1987 when, after receiving complaints about a strong odor emanating from wells in St. Thomas's Tutu area, DPNR asked the Environmental Protection Agency to sample the wells. At the time, the wells were sources of public drinking water.
The EPA, along with the federal Agency for Toxic Substances and Disease Registry, concluded that the groundwater and, therefore, the wells in the Tutu area were contaminated by an unsafe level of volatile organic chemicals — coming from a variety of sites. Further, the agencies said, the contamination may have existed for up to 20 years before the problem was discovered.
The results of studies done by the U.S. Department of Health and Human Services indicated that exposure through drinking water and other uses such as showering, dish washing and laundering could increase the risk of cancer to residents. But the department was unable to document the health risks or damages done to the community due to the contamination because no prior data on the incidence of cancer existed to provide a baseline for evaluation.
"In addition," a report of the studies published in 1996 states, "the Virgin Islands do not have a centralized cancer registry which could have possibly been used to determine if the occurrence of cancer near the Tutu Wellfield NPL [National Priority List] site is more than what would be expected."
Water from the wells was not only used by people living in the Tutu area; it also was trucked and sold to residences and businesses elsewhere on St. Thomas.
Cleanup at some of the affected areas has been handled up to now by Texaco and Esso.
The EPA expects to start its own cleanup next fall and is reviewing bids with an eye to awarding a contract by summer, according to EPA spokeswoman Elizabeth Zimmerman.
Money from the federal Comprehensive Environmental Response, Compensation, and Liability Act Fund, known more commonly as the Superfund, has been set aside for construction of the remedy, Zimmerman said. With bids being reviewed Zimmerman was reluctant to speculate on the cost, but said it would be under $10 million.
No one suggests a true remedy will come about anytime soon. The EPA has projected that without what Zimmerman called "expanded treatment," it will be more than 30 years before the aquifer water is safe again for consumption. With expanded treatment it might be sooner.
Plaskett is less optimistic. "There are those of us who think it will never be safe," he said.
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