W.R. Grace receives OK of settlement in aquifer clean-up dispute

By Caroline Salls

Pittsburgh, March 15 - W.R. Grace & Co. received court approval of a consent decree and settlement agreement that resolves longstanding disputes surrounding alleged environmental contamination and response costs at a site in Cape Cod, Mass., according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said the underlying dispute involves hydrocarbon-related contaminants in the sole source aquifer for Cape Cod.

The United States alleges that a jet fuel and aviation gasoline pipeline running from a terminal at Cape Cod Canal to Otis Air Force Base on the Massachusetts Military Reservation spilled fuel in at least two locations in the late 1960s or early 1970s and that the fuel contaminated the groundwater, the filing said.

According to the filing, the pipeline and terminal were built in 1965 and operated by Standard Transmission Corp., which was acquired by Cleary Petroleum Corp. in 1971.

Through several corporate transactions, W.R. Grace said, Cleary Petroleum Corp. became a subsidiary of W. R. Grace & Co.-Conn. and later a subsidiary of debtor Grace Energy Corp. It then changed its name to Grace Petroleum Corp.

W.R. Grace said the United States alleges that Standard Transmission caused the contamination, and that NuStar Terminal Services, Inc. and Samson Hydrocarbons Co., as successors of Standard Transpipe Corp. and Grace Petroleum Corp. are jointly and severally liable for the entire costs of the remedial effort.

The company said the federal government began addressing the contamination at the site in the 1990s.

The United States alleges that the federal government has spent in excess of $54 million to date investigating and remediating the groundwater contamination. The United States also claims it will spend $17 million in the future, for a total of more than $70 million.

Settlement terms

Under the settlement, the United States has agreed not to sue in exchange for a $21 million payment, plus interest accrued from Nov. 15, 2009 to the payment date.

In addition, Samson Hydrocarbons Co. will have a $7.4 million allowed claim against Grace, plus interest from Nov. 15, 2009 through the payment date. The Samson Hydrocarbons claim will be assigned to the United States.

NuStar Terminal Services will pay $11.7 million of the settlement payment, plus interest; Grace will pay $7.44 million, plus interest, in fulfillment of the Samson Hydrocarbons claim; and Samson Hydrocarbons will pay $1.86 million, plus interest.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

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