WHITESBURG — City officials in this Letcher County town whose water supply was shut off for days two years ago were surprised to learn last week money the state received in a lawsuit settlement over the spill will go to Jenkins — a town 11 miles upstream, in a different watershed.
"'Shocked' would be the right word," said Whitesburg Mayor James W. Craft. His city has launched legal action to get the money.
The September settlement of the Kentucky Energy and Environment Cabinet's lawsuit against Childers Oil, a Whitesburg company, directed the company to pay the state $500,000. Almost half of that amount — $240,000 — was directed to "a trust account ... to be used by the local government for sanitary sewer line extension and or rehabilitation projects."
That's for what Jenkins plans to use the money. Thirteen homes above Jenkins Lake, the city's municipal water source, have straight pipes or old septic systems, and though they are on county land, they will be hooked into the city's sewer system, Jenkins Mayor G.C. Kincer said.
Kincer, who has been in office all of a week, said Jenkins officials found the money through the Kentucky River Area Development District, though it's unclear who contacted whom. Jenkins has hired KRADD to administer the grant. As of Friday, the state Division of Water had not disbursed the money.
Wanting to remain neutral, KRADD's executive director wouldn't say whether he knew the money was coming from the Childers Oil settlement, but in September, the Division of Water contacted the office and asked for suggestions of water and sewer projects that could use $240,000. KRADD knew of the Jenkins project, and a match was made.
Craft and Kincer are both on KRAAD's board of directors.
Kincer said he "can certainly see" Whitesburg's side of the story.
But Kincer said he thinks the city of Jenkins qualifies as a "local government" recipient and plans to use the money for a worthy project for which officials have been looking for funding for a couple of years.
Kincer said the city was finalizing the details of the grant in a conference call Thursday with KRADD, the Division of Water, and Nesbitt Engineering, which has been hired for construction, when he received a letter from Whitesburg's city attorney asking them to hold the project until Whitesburg makes its case.
On Friday, Whitesburg City Attorney Jim Asher sent a motion to intervene in the settlement to Franklin Circuit Court.
Whitesburg's water was shut off for days in October and November of 2008 because of a petroleum waste spill from a Childers Oil site into the North Fork of the Kentucky River. Water was again shut off, in February 2009, when diesel fuel leaked from another Childers site on the North Fork.
Whitesburg settled its own lawsuit with Childers Oil to pay nearly $50,000 in water testing laboratory bills. Whitesburg replaced and upgraded a $125,000 filter at its water treatment plant on the North Fork. Dozens of Whitesburg residents and businesses have their own lawsuits pending against Childers Oil.
Jenkins' water supply, Jenkins Lake, doesn't even flow into the North Fork. It flows into the Levisa Fork of the Big Sandy.
Craft, the Whitesburg mayor, said his city has at least two projects that could use funding: One is a $100,000 water line replacement in one neighborhood. Another is a $3 million sewer line extension for about 400 homes.
"It's not to begrudge them anything at all," said Asher, the Whitesburg city attorney. But he said he suspects Franklin Circuit Judge Phillip Shepherd and attorneys negotiating the settlement intended the money for Whitesburg at least, or possibly the county government.
The Division of Water takes the position that "the local government" could mean any area government that could put $240,000 to good use.
"That money was not tied to Whitesburg," said division spokeswoman Allison Fleck. "That's not the way it was settled in the circuit court."
Dori Hjalmarson covers Eastern Kentucky. Reach her at (606) 653-2111.