The $333 million figure is misleading. After the law firm collected a 40% contingency fee and billed another $10 million in expenses, about $190 million was left for roughly 650 plaintiffs, and it was not split evenly. One attorney who interviewed 81 Hinkley residents put their average payout at around $151,000, and many said they received $100,000 or less. Individual awards in the 1996 PG&E settlement ran from as little as $25,000 to several hundred thousand dollars, depending on each person’s illness, exposure history, and other factors weighed in private arbitration.
What the $333 Million Settlement Actually Was
In June 1996, Pacific Gas and Electric agreed to pay $333 million to settle claims brought by about 650 Hinkley plaintiffs whose groundwater had been contaminated with hexavalent chromium from the company’s compressor station. At the time, it was the largest sum ever paid in a direct-action lawsuit in U.S. history.1Daily News. Hinkley: Legal Settlement Process Kept Details Private
The case was not a class action. Each resident filed an individual claim, and PG&E agreed to resolve those claims through private binding arbitration rather than a public trial. Arbitration had already been running for about two years and PG&E had paid awards to an initial group of plaintiffs before deciding to settle the remaining cases at once. Because each claim was evaluated separately, and because the proceedings were private, no complete public record of individual awards exists.
What the Lawyers Took First
Masry & Vititoe, the small firm that represented the residents, worked on a 40% contingency fee. That came to roughly $133 million of the $333 million total. On top of the fee, the firm billed an additional $10 million in expenses that were never publicly itemized.2The Guardian. Poisoned Town Condemns Its Movie-Heroine Lawyer Erin Brockovich, the legal clerk whose investigation drove the case, received a $2 million bonus.
That left about $190 million for the plaintiffs. Divided evenly, the math works out to roughly $300,000 per person. It was not divided evenly, and most residents received considerably less than that theoretical average.
What Individual Residents Received
The clearest public picture of the payouts comes from Mike Dolan, a Bakersfield attorney who interviewed 81 Hinkley residents after the settlement. He calculated their average payout at approximately $151,000. Many said they got $100,000 or less. One resident’s husband received $80,000. An elderly plaintiff was awarded just $25,000.2The Guardian. Poisoned Town Condemns Its Movie-Heroine Lawyer
Some plaintiffs with severe cancer diagnoses or heavy documented exposure reportedly received significantly more, but specific high-end figures were not made public. The private arbitration process meant residents had no way to compare their awards against one another, and no meaningful appeal was available. Several publicly criticized the fee arrangement and the secrecy around how amounts were calculated.
How the Arbitrators Set Each Award
Retired judges and arbitrators evaluated each claim on its own facts. Several factors drove the size of a given resident’s award:
- Type and severity of illness. Plaintiffs with cancer, organ damage, or other serious conditions tied to chromium-6 received higher awards than those with less severe health complaints.
- Duration of exposure. Residents who had lived in Hinkley longer and relied on contaminated well water for more years generally had stronger claims.
- Age and life expectancy. Younger plaintiffs with decades of expected health consequences ahead often received more than elderly residents.
- Property losses. Some residents claimed diminished property values because of the contamination, evaluated separately from health damages.
- Emotional distress and lost income. Residents who could no longer work because of their illnesses had an additional category of damages beyond medical harm.
Because the weighting of those factors was never disclosed, residents with similar health problems sometimes ended up with very different amounts.
Taxes on the Payouts
Under federal tax law, damages received on account of personal physical injuries or physical sickness are generally excluded from gross income. Damages for emotional distress are tax-free only if they stem directly from a physical injury or physical sickness; emotional distress damages tied to non-physical claims are taxable as ordinary income.3Internal Revenue Service. Tax Implications of Settlements and Judgments
For most Hinkley plaintiffs, the claims centered on physical health problems caused by chromium-6 exposure, which would typically qualify for tax-free treatment. Any portion of a payout allocated to property damage, lost income, or standalone emotional distress could have been taxable. Settlement agreements that clearly separate and itemize each category of harm give recipients the best chance of excluding the physical-injury portion from income. When agreements are vague, the IRS looks at the intent behind the payment to determine what gets taxed.3Internal Revenue Service. Tax Implications of Settlements and Judgments
Later Payments Were Separate
The 1996 settlement did not cover everyone eventually affected. Additional lawsuits were filed on behalf of residents in nearby areas of San Bernardino, Riverside, and Kings counties. In 2008, PG&E paid $20 million to settle the last of these cases, which involved 104 additional plaintiffs. A PG&E spokesperson confirmed that settlement ended the final remaining lawsuit over chromium-6 pollution in the region.4Los Angeles Times. PG&E Settles Last Chromium 6 Case
A separate property buyout program came much later. In late 2012, PG&E gave roughly 300 families living within a mile of the groundwater plume a choice between a property buyout and a whole-household water replacement system.5Daily Breeze. Hinkley: Buyouts and Waterbottles The buyout terms and pricing methodology were not made public. Neither the 2008 settlement nor the buyouts changed what 1996 plaintiffs received.
The short answer to what Hinkley residents got: after fees and expenses came out of $333 million, the typical payout landed somewhere between $50,000 and $200,000, with outliers on both ends. The gap between the settlement’s public reputation and what individual residents actually took home is the part of the story that rarely makes it into the headline.