Mountain Fuel Supply Co. has agreed to pay an undisclosed amount to settle a case in which it was accused of knowingly exposing three men to toxic materials and causing them permanent brain damage.

The suit involved the three excavation contractors' exposure to soil from Mountain Fuel's operations center at 1078 W. First South.In a counterclaim, Mountain Fuel had denied that substances in the soil were hazardous and said the contractors were responsible for any damages because they had failed to provide required insurance coverage.

James E. Morton, attorney for members of the Costello family and their excavating business, Costello Co. Inc., said there was considerable disagreement over whether brain damage had occurred.

But he said his clients are satisfied with the outcome of the case. "It's obviously a very favorable settlement for our clients."

Morton said his clients are willing to say how big the settlement was, but cannot because Mountain Fuel has required secrecy as a condition of the payment.

Mountain Fuel spokeswoman Susan Glasmann confirmed that a non-disclosure clause was put in the settlement agreement at the company's request.

"It's not that we're trying to cover up," she said. "We believe that it is a private business matter" and that "there are some privacy issues that are worthy of nondisclosure."

She pointed out that the case file - minus the settlement - is open, and said the company has never tried to withhold information from the public on the operations center or related cleanup issues.

Glasmann said the company is not legally required to report the settlement terms to its regulators at the Public Service Commission and has no plans to do so.

PSC Chairman Ted Stewart, however, said he thinks the commission will have to look into the matter, especially if the company tries to recover the money from ratepayers instead of stockholders.

Mountain Fuel has not been the only party in the suit to withhold information from the public.

Morton originally filed the complaint under seal, saying settlement talks were taking place that could be hurt by disclosure.

He also said at the time: "My clients' personal affairs should not be made a matter of public record at this time due to potential embarrassment." But if settlement talks broke down, he would move to unseal the file.

Mountain Fuel, however, moved almost immediately after the filing to have the complaint unsealed, which it was.

The Costellos' complaint was filed against Mountain Fuel Supply Co. and D.N. Rose, Roger Barrus, Robert Jones Barney and Robert Lovell, all current or former company officers, directors or employees.

It said that from about 1906 to 1929, a coal gasification plant was operated by Utah Gas and Coke Co. on property later used by Mountain Fuel as its operations center.

About April 1983, the suit said, Mountain Fuel invited the Costello company to bid on razing a building at the center, removing the materials and excavating the soil. On Oct. 10, 1983, Costello Co. and Mountain Fuel signed a contract.

But the complaint said that by August of that year, Lovell had a copy of a study detailing the hazardous materials generated by coal gasification facilities and the problems of cleanup.

Also by August, the suit said, Mountain Fuel had had another contractor excavate about 36 cubic yards of material and remove it to sites on Fulton and Orange streets in Salt Lake City.

Neighbors immediately complained to the Salt Lake City-County Health Department of strong odors, and health officials confirmed the presence of significant amounts of hazardous materials, the suit said.

The suit said Mountain Fuel hired an environmental consulting firm, which took soil samples Sept. 1, but no one said anything about hazardous materials to the Costellos, who began their work in November.

In the next four months, Michael, Patrick and Gregory Costello experienced severe illness, the suit said. They allege that the exposure to heavy metals, organics and solvents caused permanent brain damage and dysfunction.