Chevron will pay the city of San Juan Capistrano at least $1.5 million to recover costs associated with the leak of a gasoline additive into the city's water supply three years ago.
The payment is due April 7, according to a. The terms of that settlement were to be kept confidential, but the contract is available for inspection when requested under California's public-records law.
The settlement also states that Chevron could pay an additional $1.6 million in a series of payments under the following circumstances:
- $50,000 if Chevron's name is removed from San Juan Capistrano's "Chevron MTBE Water Commodity Surcharge"—a surcharge levied by the City Council in the fall of 2010 to pay for the treatment of MTBE.
- $500,000 if the city "actively" participates in a meeting with the San Diego Regional Water Quality Control Board and Chevron to discuss the city's operation of its own granular activated carbon treatment system.
- $550,000 after the city has installed the GAC system.
- $500,000 within 45 business days after the city gives Chevron notice that it has operated the treatment system for one year. During that year, the city is obligated to pump the Dance Hall well at least 80 percent of the time.
The Environmental Protection Agency describes GAC treatments as the process of funneling contaminated water through a bed of activated carbon, because MTBE does not stick well to organics such as carbon.
In January 2008, MTBE was detected in groundwater samples collected from the Dance Hall well. A month later, the Orange County Health Care Agency mandated that the water be treated, but the city and Chevron could not come to an agreement over the design of a treatement system.
According to Councilwoman Laura Freese, it was Chevron that requested the confidentiality of the agreement. The settlement does stipulate that the city needed to give Chevron at least 72 hours' notice prior to disclosing the settlement.