U.S. Borax Inc. has agreed to pay $1.25 million and a penalty of $25,000 to the Environmental Protection Agency (EPA) for a massive cleanup of arsenic contamination at more than 700 residential properties in south Minneapolis.

The agreement is part of a consent decree that must be approved by a court.

It represents a small part of the $63 million cleanup of contamination that stemmed from the release of arsenic at a pesticide manufacturing facility known as the “Lite Yard” site near 28th Street and Hiawatha Avenue S.

The contamination in the former rail yard took place for decades. But Borax was active at the facility only from 1963 to 1968 and maintained it engaged in none of the railcar unloading operations that historically caused the spread of toxins to area homes, a Justice Department spokesman said in an e-mail.

From 1938 to 1963, the plant was operated by Reade Manufacturing, which leased the facility from the Chicago, Milwaukee, St. Paul & Pacific Railroad, known as the Milwaukee Road Railroad.

“Unfortunately, both Reade and the Milwaukee Road Railroad are now defunct,” the Justice Department spokesman said. “While there was a spill of liquid sodium arsenite during the Borax era, this spill was addressed under a separate cleanup overseen by the state of Minnesota.

“Given Borax’s relatively limited operations at the site, we believe that the settlement adequately reflects Borax’s fair share of response costs, especially compared to Reade and the Milwaukee Road railroad.”

Deb Witmer, spokeswoman for Denver-based Borax, which is part of Rio Tinto Minerals, said it typically does not comment on matters pending before a court. “However, the consent decree is an agreement that was negotiated by the parties in good faith,” she said

As the only surviving company involved in the site, Borax was sued Friday by the EPA for $63 million, but the $1.25 million consent decree was attached and will be all that Borax pays if the court approves the deal.

The suit noted that arsenic trioxide powder was delivered to the plant in railroad hopper cars that workers unloaded by opening a door in the floor of each car, dumping the powder on an open-air conveyor belt.

“Arsenic trioxide powder is similar to talcum powder in weight and susceptible to airborne dispersion,” the suit said, and as a result “large quantities of arsenic power” spread through the neighborhood.

Arsenic can cause cardiovascular and nerve problems as well as cancer.

In 2007, the EPA added the residential contamination to a list of priorities under the Superfund program because of the danger of long-term exposure of residents to soil with arsenic concentrations. In 2009, the agency initiated a project to remove soil from properties.

While the Justice Department spokesman conceded that Milwaukee Road is defunct, it “technically still exists through its successor-in-interest — an entity known as CMC Heartland Partners.” The spokesman said CMC has filed for bankruptcy and the Justice Department filed a proof of claim in the bankruptcy proceeding, asserting that CMC is liable for the site.