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November 25, 1996 01:00 AM

TEXAS TOWN GETS $7.65 MILLION IN PB PIPE LAWSUIT SETTLEMENT

Bill Bregar
Senior Staff Reporter
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    The city of Round Rock, Texas, facing leaking polybutylene service lines, has accepted a $7.65 million settlement from Shell Oil Co. and Vanguard Plastics Inc. Round Rock City Council voted Oct. 10 to accept the offer. Houston-based Shell manufactured the PB resin. Vanguard of McPherson, Kan., extruded the pipes.

    Shell and Vanguard officials confirmed the settlement, but they declined to specify how the amount will be divided between the two companies or give other details.

    The city sued Shell and Vanguard in August 1995 in State District Court for Williamson County in Georgetown, Texas. Stephan Sheets, a Round Rock lawyer who represented the city, said leaks happened in service pipe that linked main water lines to water meters outside of houses. There were no problems with plumbing inside residences, he said.

    About 3,700 of the pipes were installed in the city's water system, Sheets said. Most of the pipes measured 1-111/2 inches in diameter. They were installed in the late 1970s and early 1980s.

    Money from the settlement will go to replace the pipes.

    Shell, facing huge legal bills, stopped making PB resin earlier this year. Shell was the only major supplier of the resin.

    Vanguard and other PB pipe extruders have switched to other plastic materials, including chlorinated PVC and cross-linked polyethylene.

    Many of the complaints about PB pipe happened in Texas. The city of Austin has filed a lawsuit similar to the Round Rock case. That case, which still is pending, also covers water service lines. Austin lawyer Jim George said chlorinated water caused oxidation in the pipes.

    Meanwhile, in Houston, a fight continues over millions of dollars in lawyer fees as part of another settlement brokered for thousands of homeowners by the Houston law firm of Fleming, Hovenkamp & Grayson. The firm settled on behalf of its clients for $170 million in cash. Under the original terms, the lawyers would have received $109 million in legal fees and expenses - but on Nov. 18, state District Judge Russell Lloyd in Houston rejected that amount, calling it excessive.

    According to a report in The Houston Chronicle, the judge ruled that more than $126 million of the $170 million settlement has to go to the firm's clients. The paper said Fleming, Hovenkamp & Grayson was studying the 19-page ruling. The firm did not return a telephone call for this story. Court officials could not be reached for comment.

    The settlement also includes replacement plumbing, estimated to be worth another $190 million.

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