Albany

General Electric Co. will pay $7.95 million to settle part of a federal lawsuit filed in 2009 by several Saratoga County municipal agencies that shut down or moved their water supplies when the company began dredging PCBs from the Hudson River that year.

The settlement ends an intensive legal battle that's unfolded in U.S. District Court in Albany between GE and the towns and villages of Stillwater and Waterford, and the Water Commissioners of the town of Waterford. Two other plaintiffs — the Saratoga County Water Authority and the town of Halfmoon -— did not join the settlement and are moving forward in their litigation with GE.

A federal complaint filed by the municipalities five years ago claimed GE should help pay the costs for alternate water supplies that the towns and villages pursued when the company's federally mandated $1 billion dredging project began. The Saratoga County Water Authority, meanwhile, alleged it spent more than $27 million to build its water-supply intake on the Hudson River in Moreau to be upstream from the company's PCB pollution.

GE's federally mandated clean-up of the upper Hudson River, which is the nation's largest superfund site, has caused occasional spikes in PCB levels that prompted the towns of Waterford and Halfmoon to shut down their water treatment plants, which both pull water from the Hudson River. Those communities have since purchased water from the city of Troy's Tomhannock Reservoir while the dredging continues at least through 2015.

The settlement, which was signed on behalf of GE by Ann R. Klee, the company's vice president of corporate environmental programs, states GE "has denied, and continues to deny, any liability, wrongdoing or responsibility for the claims asserted in the litigation and believes that the claims are without merit and that such claims are barred in whole or in part."

The settlement was not filed in U.S. District Court; a copy was obtained by the Times Union under a Freedom of Information Law request.

Mark L. Behan, a spokesman for GE, said the company is hopeful that it also can reach a settlement with the town of Halfmoon and the Saratoga County Water Authority. He said the settlement with the Stillwater and Waterford communities "made sense."

"All the parties agreed that the settlement that we came to was a fair and reasonable resolution to what was becoming protracted litigation," Behan said.

The settlement amount will be reduced by hundreds of thousands of dollars in legal costs and an approximately 30 percent contingency fee that will be paid to Dreyer Boyajian, the Albany law firm that represented the agencies who settled.

After the attorneys are paid, the settlement will result in roughly $4 million to be divided by the town and village of Stillwater, although most of that money will go to the village, which runs the water system that helps supply the town and saw its well fields contaminated with PCBs. The remaining $1.45 million from the settlement, minus legal costs, will go to Waterford.

Attempts to reach Stillwater village Mayor Ernest W. Martin Sr. for comment this week were not successful.

The years-long litigation resulted in GE having to turn over more than 10 million pages of internal records to attorneys for the river communities. The lawsuit also subjected severalof GE's top executives, including former CEO Jack Welch, to sworn depositions about their knowledge of the company's handling of the PCBs at its capacitor plants in Fort Edward and Hudson Falls.

Despite the unprecedented glimpse of the company's internal strategies, thousands of other internal records remain sealed under a court order, in part, because GE argued they are privileged documents involving attorney-client matters. Last year, the Times Union obtained copies of thousands of pages of the GE records through a series of Freedom of Information Law requests for a story published March 8 examining the company's pollution of the Hudson River.

The internal records show GE began aggressively studying the health and environmental issues related to PCBs more than 40 years ago, and curtailed use in the early 1970s of what it suspected at the time was a more dangerous type of PCBs. The documents also revealed GE's fierce battle in which it spent at least $100 million to fight the dredging and try to convince the public and key elected officials to oppose the clean-up plan.

There is no indication that the town of Halfmoon or Saratoga County Water Authority are engaged in settlement discussions with GE and the case is wending toward trial in federal court.

Waterford Supervisor John E. Lawler, who also chairs the county water authority, said the town's water services are overseen by an independent board of water commissioners. He said many of the town's costs to pump water from Troy were covered when the U.S. Environmental Protection Agency helped fund the construction of a water line across the river.

"A lot of the damages that we might have looked for in a lawsuit, when we originally filed a lawsuit, they were addressed in other ways," Lawler said. "But I think the settlement is reasonable."

Waterford's settlement with GE does not effect the town's separate lawsuit in state Supreme Court alleging the town of Halfmoon breached a more than 30-year contract to purchase water from Waterford, which is seeking nearly $8 million in damages. The town ofHalfmoon has countered in court papers that it did not violate its agreement to buy at least 27 million gallons of water every quarter from Waterford. Halfmoon's attorney, David A. Engel of Albany, said in a response the agreement was voided when both communities shut down their water treatment plants and started buying water from Troy in 2009.

The lawsuit between the towns was filed in 2012 and has languished in state Supreme Court with no activity in more than a year.

GE opened its Fort Edward manufacturing plant in 1946 and its Hudson Falls plant, a mile up the river, in 1951. The court records indicate GE purchased an estimated 190 million pounds of PCBs over a period of decades, using it as a dielectric fluid to insulate its capacitors from overheating. PCBs, a coal-tar byproduct, were for many years the government's preferred chemical for that purpose, in part because they were effective at preventing fires while not interfering with conductivity.

PCBs, which a committee for the World Health Organization has declared are a known carcinogen, were banned by the U.S. Environmental Protection Agency in 1979.

Much of the Hudson River's pollution occurred when PCBs were spilled onto the ground or seeped into the bedrock below GE's Washington County factories. They were also flushed into the capacitor plants' wastewater systems, which poured into the nearby river.

John A. Harrington, who was employed at GE's Hudson Falls plant from 1951 to 1968, signed a sworn affidavit taken by the EPA in January 2007 describing how PCBs — which GE referred to under the trade name "pyranol" — were handled at the Washington County plant. The affidavit was filed in a federal case in New Hampshire in which the EPA pursued environmental charges against GE in connection with its distribution of waste PCBs to a paint-manufacturing company.

"Approximately two to three times per year, if not more, up to one-thousand gallons of pyranol would become contaminated, with something, which rendered it to waste," Harrington's affidavit states. "If barrels were available, this waste pyranol would be barreled. If there were no barrels available, a valve was opened on the waste pyranol tank which was located between buildings one and two, and the waste pyranol was allowed to flow through the pipe that went into the ground and snaked its way out and into the Hudson River. This occurred two to three times a year, if not more, during the time I worked in this department."

GE's spokesman said there's no way, decades later, to verify Harrington's claims. The company has repeatedly insisted it never broke any environmental laws and that its toxic discharges were "permitted."

Behan, who owns a Glens Falls communications firm under contract with GE, said in an email in March that Harrington's affidavit "adds little to the discussion."

"There is no dispute that PCBs reached the Hudson River based on disposal practices that were common a half-century ago and eliminated decades ago," he wrote. "What is abundantly clear is that, when concerns about PCBs were raised, GE took steps to change its manufacturing operations to reduce and ultimately eliminate the loss or discharge of PCBs to the environment. What's also indisputable is that, since the 1970's, GE has conducted and paid for comprehensive cleanups of PCBs on its plant sites ... and has met and continues to meet every regulatory commitment."

GE's fifth year of dredging the upper Hudson River began this spring.

blyons@timesunion.com • 518-454-5547 • @blyonswriter