The U.S. Environmental Protection Agency has reached a settlement with Occidental Chemical Corp. to perform engineering and design work necessary to clean up 8.3 miles of New Jersey’s lower Passaic River, the most polluted portion.

Sediment in the Passaic River is severely polluted with dioxin, PCBs, heavy metals, pesticides and other contaminants. The pollution is largely caused by the former Diamond Alkali facility in Newark, where the production of Agent Orange and other pesticides during the 1960s generated dioxin that contaminated the land and river. The lower 17 miles of the river are part of the Diamond Alkali Superfund site, and the EPA says 90% of the river’s pollution is concentrated in the lower 8.3 miles.

The $165 million will pay for the sampling, technology evaluation and engineering work that is necessary before actual cleanup can begin, as well as the cost of EPA’s oversight of the work. The design phase is expected to take four years.

“This agreement is a milestone in getting the Passaic River cleaned up,” said Judith Enck, EPA regional administrator, in an Oct. 5 statement. “It is an example of how Superfund is designed to work—those responsible for the contamination pay for the work, rather than the taxpayers.”

EPA says it plans to work with other potentially responsible parties to negotiate additional settlements for the cleanup, which is estimated to cost $1.38 billion.

The cleanup plan, which EPA finalized in March, requires the permanent removal of approximately 24,000 lb of mercury, 6,600 lb of PCBs, 1,300 lb of DDT and 13 lb of highly toxic dioxin. EPA expects cleanup crews to dredge 3.5 million cu yd of sediment and then, from bank to bank, cap the river in the lower portion to isolate any remaining contaminated sediment.

Although Occidental Chemical Corp. did not directly discharge pollutants into the Passaic River, the company is legally responsible for pollution discharged from the former Diamond Alkali pesticides manufacturing plant that operated from the 1940s to 1960s. The factory no longer exists, and the company that owned it is now part of Occidental Chemical Corp. Eric Moses, spokesman for Occidental, said the company is “pleased to have reached an agreement” with the U.S. EPA.