Chapman University and Arco say they have reached an out-of-court settlement resolving a lawsuit accusing the oil company of selling property in Orange, California, that was contaminated with toxic chemicals.
The Orange County Register reported Friday that Chapman purchased the property in 1998. It was once the site of the city of Orange's largest industrial plant.
University officials say they discovered the contamination in 2011 when they pursued plans to put a residence hall there. The lawsuit estimated cleanup costs would exceed $5 million.
Terms of the settlement were not disclosed, but officials say the university will pay only a small part of the costs.
Chapman now plans to put a recreational area on the site. The residence hall will go across the street.
Arco is owned by Texas-based Tesoro Corp.