$4 MILLION: Lodi's latest pollution settlement

The city of Lodi has received a $4 million settlement from one of its insurance carriers in the ongoing groundwater contamination case.

Hartford Accident and Indemnity agreed to the settlement Monday. This brings the city's total to $4.8 million in recent settlements from insurance companies. The city settled for $9 million with its primary insurer USF&G two years ago, City Attorney Steve Schwabauer said.

Money brought in through litigation will help pay for the cost of the city's groundwater contamination cleanup. Large settlements such as this could translate into savings for ratepayers who recently endured a water rate hike to help pay for the cleanup.

Of the city's eight so-called excess insurance carriers, four have settled so far, including Monday's settlement. An excess insurance policy covers the holder once a certain dollar threshold on another policy has been reached.

A spokeswoman for Connecticut-based Hartford Accident and Indemnity reached Tuesday said she could not comment on the case because she did not have all the details.

A fifth insurer is close to reaching a settlement, and the other three are scheduled for mediation later this month and in early September, Schwabauer said.

The city held all of the insurance policies between 1977 and 1987. Lodi's groundwater was believed to be contaminated during that time with the chemicals PCE and TCE, which are used in drycleaning and industrial cleaning.

"They're old policies," Schwabauer said, "but we can go back and prove the pollution occurred when the policies were held."

Mayor Bob Johnson said he is pleased with the settlement. He said it represents the wrapping up of the contamination litigation.

"It's significant because we are getting to the end of the road," he said. "It is coming to the end of a very painful piece of Lodi's history."

The settlements with the insurers are separate from the settlements with responsible parties. The city has settled with around 100 parties, including the

News-Sentinel, for a total $14.6 million in the five contaminated Downtown plumes, leaving three parties unsettled.

The city's estimated $45 million cleanup cost includes the third party settlements, attorney fees and the water rate increase. It does not include the settlements from insurers, Schwabauer said, meaning the total cost will come down as settlements with insurance carriers are reached. He said water rates could be reduced if enough money is collected in settlements.

"There is a possibility that rates could be adjusted again, but we don't know what the costs will be until a few years into the cleanup," he said. "Until it all shakes out, we're not prepared to say what happens next."

Besides the Hartford settlement, the city has settled with ACIC for $250,000, Lloyds for $400,000 and Federal for $225,000. The outstanding cases are with AIG, Industrial Indemnity, Transcontinental Insurance Company and Admiral Insurance Company.

Schwabauer said one of the cases is likely to go to trial, but he declined to say with which carrier.

"We'll know in 8-10 weeks whether we're going to settle with the other carriers," he said. "If it's going to settle, it will settle quickly."

As the litigation wraps up, Schwabauer said the contamination problem shifts to the Public Works Department, which has begun the 30-year cleanup effort.

"I get to walk into the sunset in this mess and let Public Works take over," he said. "It's been a long way but we're just about there."