DOJ, Judge Side With Exide Regarding Toxic Property
‘This blatant disregard for the community by Exide,’ said a lawmaker.
Exide Technologies can abandon its heavily contaminated battery recycling plant in Vernon and stop paying for environmental protections preventing the spread of toxic dust to neighboring cities as soon as Oct. 30, a federal judge ruled this month.
The court’s support of Exide’s bankruptcy plan allows the company to avoid liability for decades for environmental harm to the largely Latino communities surrounding the plant and dumps the cost of cleaning up the contaminated property — estimated at nearly $100 million — at the feet of California’s taxpayers.
Judge Christopher Sontchi, presiding over a federal bankruptcy court in Delaware, barred the international company from abandoning the property before Oct. 30 to give California officials time to prepare for the transition. Exide’s funding of an $800,000-a-month tent containing the toxic dust inside the plant is covered by insurance until that date.
If California is “unable to transfer this property in the next two weeks, it’s because of their own bureaucracy, or their inability to act, not because of anything the debtors are doing,” Sontchi said in his ruling.
The state had months to prepare for this possibility, he said.
‘Imminent’ environmental threat
Lawyers representing the California Department of Toxic Substances Control argued the lead dust remaining at the Exide plant poses an “imminent and substantial” risk to public safety and asked Sontchi to take abandonment off the table. If abandoned, the site, which requires daily maintenance, could fall into an even worse state while California goes through the process of seizing control, its lawyers argued.
Waste treatment systems could overflow and spill contaminated water into the streets. The protective barrier could rip and spread more lead dust into communities already impacted by Exide’s decades of operation.
Allowing the site to be abandoned would set a precedent that polluters can simply file for bankruptcy and then dump contaminated assets to avoid any liability, said Peter Friedman, an attorney representing DTSC, in his closing remarks.
“What the debtors are saying is that somebody else can take care of this problem,” Friedman said. “It creates such terrible, perverse incentives. This can’t be the law.”
$270 million spent for cleanup
DTSC officials estimate lead, arsenic and cadmium produced during Exide’s decades of operations spread up to 1.7 miles away, contaminating schools, parks and thousands of homes in the working-class neighborhoods of Boyle Heights, East Los Angeles, Maywood, Huntington Park and Commerce. California already has spent more than $270 million to clean up 3,200 properties impacted by the contamination. A study at USC found children close to the facility had twice as much as lead in their baby teeth compared to those who participated in a similar study in Boston.
Critics have accused the state of failing residents by allowing Exide to operate on temporary permits, against federal regulations, for more than 30 years.
While Sontchi acknowledged lead can cause long-term health effects, such as developmental disabilities and cancer, it takes time to build up in the human body, he said. California can take control of the site — and funding of the protective measures — before any immediate harm could occur, he said. Testimony offered during the two-day hearing described DTSC employees walking around the exterior of the site without wearing respirators, which Sontchi said did not support the state’s argument that there is an imminent threat to human health.
“There is no evidence it is going to explode into flames here,” Sontchi said.
State can appeal ruling
The ruling gives California seven days to file an appeal and leaves open the possibility the state could later file an administrative claim for expenses against the estate.
The U.S. Department of Justice supported Exide’s bankruptcy plan, as did other states where Exide operated facilities. The other contaminated properties will be placed under the control of various trustees. California rejected a settlement that would have provided $2.6 million to the state and established a trustee for the Vernon site. Roughly $26 million was previously set aside by Exide to cover cleanup efforts.
Attorneys for Exide argued those existing funds, combined with the $2.6 million, would cover costs of the protective measures in place for months and years. But California’s attorneys countered that spending the money on upkeep would reduce the funding necessary for the more permanent solution of demolishing and cleaning up the site, something Exide was supposed to pay for under previous agreements.
The U.S. Attorney’s Office agreed not to pursue prosecution against Exide in 2015 in exchange for the shuttering of the Vernon facility and the payment of $50 million toward the cleanup. Exide admitted to the illegal storage, disposal, shipment and transport of hazardous materials at the time. The agreement allows the U.S. Attorney’s Office to prosecute the felonies at any time until 2025 if Exide failed to adequately finance cleanup efforts in Vernon.
State and county officials have called on the federal government to follow through with the prosecution in light of Exide’s bankruptcy.
“When Exide entered into its first bankruptcy, the federal government entered into a non-prosecution agreement with Exide and its executives, protecting them from criminal prosecution, as long as they agreed to clean up the facility and surrounding community,” said L.A. County Supervisor Hilda Solis in a statement. “However, now the Trump administration is letting Exide walk away from that promise, leaving the cost of that cleanup to the taxpayers.”
The judge’s decision is an insult to residents and “demonstrates the federal administration’s unwillingness and failure to hold polluters accountable,” Solis said.
Assemblywoman Cristina Garcia, whose district includes Commerce, called Sontchi’s ruling appalling in a statement.
“This blatant disregard for the community by Exide, the DOJ and the judge is another reminder that if you’re brown and poor, you’re disposable,” she said in the statement. “I expect the state to file an appeal and to continue fighting for justice. It’s long overdue for us to put the public’s lives over profits.”