December 6 -- A landmark multi-million dollar settlement
approved by the City Council Tuesday could secure water for Santa
Monica for decades to come and cap a ten-year costly dispute with
giant oil companies.
Under the $131 million settlement -- reached a decade after Santa
Monica’s water supply was discovered tainted by a gasoline
additive -- the City will take over the building of a new water
treatment system that will service local homes, businesses and
Approved in closed session, the settlement with Shell, Chevron,
and ExxonMobil will also pay for replacement water until the plant
is scheduled to go on line in 2010, City officials said.
Santa Monica's new mayor, Richard Bloom, called the agreement
a win for the City, without taxing residents.
"The funding provided… can build a system… and
provide clean water to Santa Monica residents at no cost to City
taxpayers, and is adequate also to provide clean replacement water
to City residents until the system is operational," Bloom
Craig Perkins, the City's Environmental and Public Works manager,
said after the announcement that the project would be on time
and under budget..
"The City is now fully responsible for the design and construction
and operation, and the oil companies are giving us enough money
to do the project the way we need to do it to quickly restore
clean drinking water," Perkins said.
The trick, now, is to build the large and intricate facility
– still only in sketches.
When completed, the plant will service as many as 90,000 permanent
residents and nearly 300,000 daytime visitors, Perkins said, noting
that the money will pay for temporary water, groundwater monitoring
and insurance, as well as building and operating the facility.
"That $131 million has got to pay for a lot of stuff,"
Perkins said. "We're going to work very diligently to finish
the project and restore the drinking water to the community."
If not completed on budget, Santa Monica will be stuck with any
additional costs, Perkins said.
"They (the oil companies) are being released from any obligation
to pay for the clean up of current contamination, so that's a
big deal," said Perkins.
"We accept that risk, but we very carefully negotiated this
settlement so that we are very confident we have enough money
to get the job done right," he said.
As California water politics continue to heat up -- with more
and more people moving to the Golden State each year taxing a
limited water supply -- the facility will also free Santa Monica
from its dependence on water from elsewhere, officials said.
"We're pleased to have worked with the City to reach an
agreement that allows the City water independence far into the
future, as well as full control over its own public works,"
said Brad Boschetto in a prepared statement, a representative
of the energy consortium that worked with staff on the facility.
Citing those goals, City officials said they would push a tough
timeline to restore water in the next four years, two years ahead
of oil company projections.
"Our target is to have it operational by 2010," Perkins
said. "That's a very aggressive target, but we're going to
do our best."
The settlement now effectively clears Shell, Chevron and ExxonMobil
of any continued legal obligation to build the system –
a key component of an earlier 2003 landmark settlement agreement
of $121.5 million reached between the City and the giant multinational
That 2003 accord may be the largest legal award in Santa Monica's
history before the settlement announced Tuesday. The City, however,
is still litigating outside legal fees for that agreement that
could run into to tens of millions of dollars. (see
Since the 2003 agreement, Perkins said, there have been ongoing
disputes on how and when to build the facility, expected to pump
nearly 7,000 gallons of water per minute to area customers.
"Quite frankly the (recent) arbitration revolved around
the interpretation of some of those terms in the agreement,"
he said. "Rather than argue a lot over a long period of time
about all of those differences, both parties agreed it would better
to figure out a different kind of path to resolution."
Since 1996, Santa Monica’s drinking water has been imported
form the Metropolitan Water District at the oil companies’
expense, after the gasoline additive MtBE, an oxygenate designed
to make gas burn cleaner, was detected in the City's Charnock
Well Field in nearby Mar Vista.
The additive – originally added to help protect clean air
– is thought to be cancerous.
In the aftermath, the City – in addition to taking a lead
role in litigation – has been a major proponent of upgrading
underground gasoline storage tanks and implementing a more effective
monitoring system, currently conducted by service station managers
But there are still some unanswered questions as Santa Monica
takes on the hefty task of securing its water and building the
Foremost among them may be where to locate the facility, which
City officials said will be on land already owned by the City.
"Honestly the treatment facility they have to build is
very substantial, it's not a small treatment facility," said
Dr. Mark Gold, executive director for the Santa Monica-based non-profit,
Heal the Bay, and head of the City's influential environmental
But the biggest concern, Gold said, is that the City uses all
of the money to get the facility up and running.
"If all the money doesn't get used, it could basically revert
back to the council for their decision," Gold said. "You
can imagine with an incentive like that, there's sort of an incentive
to low-ball the drinking water clean-up."
Indeed, Perkins and some council member alluded to the prospect
of coming in under cost, if possible.
"Hopefully if we are smart and efficient, we will have some
money left over at the end of the day," Perkins told The
Despite the lengthy battle and mounting legal bills, taking over
the building of the facility is a giant step forward for the City,
"I think it's a huge relief for Santa Monica and hopefully
we can finally move past all the fighting between the oil companies
and Santa Monica, which has occurred for a decade, and we can
start to become self-reliant on our water supply," Gold said.
The goal of the City’s sustainable plan is to get back
to 75 percent reliance on local ground water supply, a level that
predates the water contamination saga, Gold said.
"That's something for us to do and finally start moving forward
on this," Gold said.