City of Newburgh and Central Hudson Gas & Electric Corporation Settle Contamination Lawsuit.

WHITE PLAINS, N.Y.--(BUSINESS WIRE)--March 12, 1999--On March 4, 1999, U.S. District Court Judge Charles L. Brieant approved a settlement agreement between the City of Newburgh, New York and Central Hudson Gas & Electric Corporation, ending nearly four years of litigation over contamination of City property bordering the Hudson River, near a former manufactured gas plant.

Under the settlement, Central Hudson will clean up at its expense the City's property in accordance with a Consent Order it had signed in 1995 with the New York State Department of Environmental Conservation. The property includes the City's wastewater treatment plant along the Hudson River, underwater land in the Hudson River and a nearby City street. The City and Central Hudson have agreed to work together to "foster a timely, appropriate and economical remediation" of the City property.

"We are pleased to have achieved an amicable settlement agreement working with Central Hudson. As a result, the City's taxpayers will not be burdened by the cost of this clean-up of the City's property. Instead, they will be able to enjoy the benefits of a clean waterfront for generations to come," said Harold Porr III, Newburgh City Manager.

"Both parties recognize the benefit of reaching an agreement to resolve the additional issues in the case and any future appeals," said Jeffery A. Clock, Central Hudson's Director of Environmental Affairs. "Clearly, this settlement demonstrates that Newburgh can work with local business to do what's best on behalf of its residents. We're certainly pleased that we could work cooperatively with City officials to reach a comprehensive agreement which resolves all outstanding issues, and we are prepared to begin the process of cleaning up the property."

Both parties expressed their approval of an outcome that is fair and leads to a cooperative and effective remediation of the property, Clock said.

Under the settlement agreement, Central Hudson has agreed not to seek to recover any of Central Hudson's costs from the City, and the City has agreed not to seek any recovery from Central Hudson of increased wastewater treatment plant operating costs caused by the contamination. Central Hudson also has agreed to indemnify the City against claims brought by third parties based upon the contamination at issue in the lawsuit, other than claims arising from the City's operations, construction, expansion or effluent discharges at the waste water treatment plant.

In satisfaction of all the City's claims for monetary payments from Central Hudson, the parties have agreed that Central Hudson will make partial payment to the City for its expenditures incurred in connection with the investigation and remediation of the property. Central Hudson will make payments to the City as follows:

a) $2 million within 30 days of the Court's order of March 4, 1999

dismissing the lawsuit; and b) $500,000 within 18 months of March 4, 1999.

In addition, if the total cost of cleaning up the City's property is less than $16 million Central Hudson will pay the City an additional variable amount up to a maximum of $500,000. The amount of this additional payment, if any, will depend on the extent to which the cost of clean-up is less than $16 million.

The City's lawsuit against Central Hudson was triggered after the finding of oily, tarry wastes in the ground at the wastewater treatment plant in August 1994, during construction of new treatment facilities. The discovery of wastes halted this construction project while an investigation was carried out by Central Hudson of the City's property and of Central Hudson's adjoining former manufactured gas plant site. The City and Central Hudson signed a separate agreement last July under which construction of the new facilities was resumed, with Central Hudson agreeing to fund the expected costs of $2.8 million for that project. That agreement is unaffected by this settlement resolving the lawsuit.

Representing the City in the lawsuit and settlement was the New York law firm Carter, Ledyard & Milburn. Central Hudson was represented by Jaeckle,Fleischmann & Mugel, LLP, Buffalo, New York and Gould & Wilkie LLP, New York, New York.