The agreement, resolved through mediation, includes the release of $231,000 out of an existing escrow account set up by the town and SouthWest, plus $35,000 in legal fees paid to the town.
“We are happy with the results and happy to have this whole episode behind us,” said Discovery Bay General Manager, Rick Howard.
Last summer, the town sued SouthWest for breach of contract for failure to release to the town escrow dollars designated for payment incurred from the 2008 spill in the Lakeshore development. SouthWest’s contract with the town stipulated that the water vendor was contractually obligated to pay fines incurred under its watch.
The state water board concluded that the spill was the result of negligence and subpar operating procedures. SouthWest however, believing that the deadline had passed for distribution of funds, countersued the town. Mediation resulted and the town prevailed.
The delay in the state filing of the required paperwork supporting the town’s claim to the fine fund was the result of a perfect storm of timing, staffing and economic setbacks.
“What took so long,” said Howard, “was the fact that the state water board, due to the downturn in the economy, was understaffed and overworked and was not able to get to us in a more timely fashion. It’s nothing anyone did wrong; just a series of circumstances.”
The July, 2008 spill occurred as the result of a bird that flew into the Newport pump stations’ computer grid, causing an electrical failure that shut down two of the main water pumps, causing a manhole to backup into a storm drain inlet that flows into the 40,000-gallon community lake. The size of the spill was originally estimated at around 10,000 gallons of sewage but was revised to more than 90,000 gallons.
SouthWest Water eventually rescinded its contract with the town in December of 2008. Veolia Water – the town’s current water vendor – came on board in January of 2009.
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