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City Announces Settlement of TCP Lawsuit

In accordance with the Brown Act, the City of Bakersfield is pleased to announce that it has reached a settlement in its lawsuit entitled: California Water Service  Company and City of Bakersfield v. The Dow Chemical Company, et al. San Mateo County Superior Court Case No. CIV 470999.

The case was brought by the City to recover damages as a result of the contamination of its water from a fumigant manufactured by Dow/Shell Oil which contained 1,2,3 trichloropropane (TCP). The State of California has recently adopted a maximum contamination level of 5 parts per trillion (ppt) for this contaminant.

In order to remove the TCP from city wells, the City has to install vessels containing granular activated carbon. This has required the City to bond for said capital costs, resulting in higher water fees to city customers. The gross settlement to the City of $82 million less legal fees and costs, for a net of approximately $54 million, will allow for recovery of the capital costs to install the treatment in 35 city wells.

Under the settlement terms, the City is also able to preserve future claims against the defendants should the need arise to expand the clean-up process.

At the January 10, 2018, City Council meeting, staff will bring forward an action item for consideration by the City Council which would call the previously issued bonds in the amount of $23 million. That process takes notice to bondholders and about 35 days. At the February 21, 2018, City Council meeting, City staff will also propose that the two water rate increases previously authorized be voided; one for 13% which would have gone into effect in July 2018 and another for 7.6% that would have gone into effect in July 2019.

A 16% rate increase was previously approved and went into effect in October of 2017. When the capital costs to complete the treatment facilities are fully known and when practical experience provides a more accurate understanding of ongoing operation and maintenance costs it is possible that a portion of the previously enacted 16% increase can also be reduced.

The City Manager’s Office is proposing to bring that issue forward to the City Council in conjunction with consideration of the 2018/19 Fiscal Year Budget in June 2018.