By Chiara Canzi
Special to the Daily Press

CITY HALL The City Council has settled its fee dispute with lawyers who represented City Hall in the MTBE water contamination lawsuit, agreeing to pay them $55 million for their services.

The council approved of the settlement Tuesday night. The attorneys helped City Hall secure $250 million in damages from several major oil companies, which were responsible for letting MTBE, a gasoline additive, into Santa Monica’s groundwater, forcing city officials to close wells supplying roughly 80 percent of Santa Monica’s drinking water.

“(City Hall) considers this a fair resolution that brings a highly contentious lawsuit to an end,” said Mayor Herb Katz. “The city can now pay full attention to our primary goal of restoring the city’s drinking water.”

Calls to the law firms that represented City Hall were not returned by presstime.

The contingency attorneys had originally asked for 25 percent of the recovery settlement but added more fees that amounted to close to $100 million, city officials said.

Although City Hall rejected that claim, it said it was always willing to pay a reasonable fee. The agreement that was reached represents 22 percent of the total recovery amount City Hall received from the oil companies that were sued by in 2000 for the contamination.

“This is much less than is normally paid to contingency attorneys who typically are paid up to 40 percent,” City Attorney Marsha Moutrie told the council right before it voted Tuesday night.

Shell, ChevronTexaco, ExxonMobil and other smaller oil companies agreed at first to pay $120 million in 2003 in damages with the commitment to work with City Hall to design and build a water treatment facility. An additional $131 million was negotiated by the city’s attorneys in 2006 with the condition that the oil companies would help with the construction plans of the water treatment facility.

The fee dispute between lawyers and City Hall arose out of the disagreement about how to calculate the contingency fee that was linked to the value of the oil company’s promise to lend a hand.

“This settlement finally allows the city to focus on building the treatment facility and reinstating our water independence,” said City Manager Lamont Ewell. “After paying the contingency attorneys, the city will have enough funds to build the treatment facility.”

In 1996 City Hall discovered that its wells in the Charnock Well Field were polluted with the gasoline additive methyl tertiary-butyl ether (MTBE). The water of five out of 11 wells was contaminated and City Hall was forced to shut them down. The contamination resulted from leaks in underground fuel storage tanks and pipelines owned by various oil companies.

Since then, City Hall has been purchasing water from the Metropolitan Water District to supply about 80 percent of the 13 million gallons of water regularly used by Santa Monica residents. The outside supply of water costs the city about $3 million a year that is regularly paid with the proceeds of the 2006 settlement.

Although MTBE is not a severe threat to the human body, the Environmental Protection Agency reports that if taken in high doses, MTBE could become a potential human carcinogen. The Santa Monica water wells incident was the first major water contamination in the country that brought public attention to MTBE, the EPA said.

The design for the new water treatment facility is in the planning stages and City Hall is estimating that water could be produced from the facility starting in 2010. In the meantime, the EPA is currently working closely with the Los Angeles Regional Water Quality Control Board and the Charnock Well Field with a site-specific clean-up process, said the agency.

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