U.S. Liquids to Appeal Decision in Lawsuit With Carrier

May 9, 2003

U S Liquids Inc., a provider of liquid waste management services, announced that the United States District Court for the Southern District of Texas has granted the company’s insurance carrier’s motion for summary judgment that the insurance carrier is not obligated to defend or to indemnify the company or certain of its representatives in the consolidated securities class and shareholder derivative action filed against the company and its representatives in 1999.

As previously announced, during the third quarter of 1999, six securities class action lawsuits were filed against the company and certain of its current and former officers and directors in the United States District Court for the Southern District of Texas. These lawsuits and a related shareholder derivative action have been consolidated into a single action styled In Re: U S Liquids Securities Litigation.

After being sued, the company made demand on its insurance carrier to defend the consolidated action. The company’s insurance carrier reportedly declined to defend the company and its named representatives and filed a declaratory action to determine its legal rights under the company’s insurance policy. The company and its insurance carrier subsequently filed motions for summary judgment to determine whether coverage is available under the insurance policy.

The company reportedly intends to appeal the court’s ruling that the insurance carrier has no duty to defend or indemnify the company or its current or former officers and directors in the consolidated action. Proceedings in the consolidated action will continue to be suspended pending the outcome of the company’s appeal.

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