(AP) – April 23, 2008 -- An energy company has agreed to pay residents of a polluted waterfront neighborhood and to clean up the massive contamination that turned the soil under their homes blue, lawyers for the neighbors said Wednesday, though the company said a deal had not been reached.

Attorneys Robert McConnell and Mark Roberts told The Associated Press they reached a tentative settlement with Southern Union Co., but said the terms were sealed so they would not discuss details.

Jonathan Gasthalter, a spokesman for Houston-based Southern Union, said the case had not been resolved. The company has denied wrongdoing.

Jury selection was to have begun Wednesday.

"There is a lot of work that needs to be done in order to make sure that it's put into place, and if we aren't able to do that, we go back to trial," Roberts said of the possible settlement.

The contamination was discovered in 2002 when a work crew digging a sewer line struck blue soil. Subsequent tests revealed the ground contained arsenic, cyanide, lead and other toxins. Investigators at the state Department of Environmental Management believe the Fall River Gas Co. - now owned by Southern Union Gas - dumped industrial waste as late as the early 1970s.

Residents complained the contamination essentially left them trapped, unable to sell their properties or get home-equity loans. People who live in the neighborhood can't dig in their yards and they were advised to vacuum their homes each day to keep down exposure to the soil. Some have put tiles over their land to protect children.

Southern Union's local affiliate, New England Gas, was sued by residents of roughly 90 households.