Taxpayers, not company, will pay for massive Exide toxic cleanup, under plan OK’d by court

A bankruptcy court ruled Friday that Exide Technologies may abandon its shuttered battery recycling plant in Vernon, leaving a massive cleanup of lead and other toxic pollutants at the site and in surrounding neighborhoods to California taxpayers.

© (Al Seib/Los Angeles Times)
Portions of the shuttered Exide Technologies facility, in Vernon about 5 miles outside of downtown Los Angeles, are wrapped in white plastic to prevent the release of lead and other harmful pollutants. (Al Seib/Los Angeles Times)

The decision by Chief Judge Christopher Sontchi of the U.S. Bankruptcy Court District of Delaware, made over the objections of California officials and community members, marks the latest chapter in a decades-long history of government failures to protect the public from brain-damaging lead, cancer-causing arsenic and other pollutants from the facility.

The plan’s confirmation only deepens a fiasco that has subjected working-class Latino communities across southeast Los Angeles County to chronic and dangerous levels of soil contamination and made the area a poster child for environmental injustice.

Community groups have fought for years with the company and its environmental regulators to restrict harmful pollution, shut down illegal operations and clean up the toxic mess. The property’s abandonment compounds the challenges of addressing ongoing health risks to young children and others living nearby, where thousands of yards remain riddled with lead, a powerful neurotoxin with no safe level of exposure.

The decision followed a two-day court hearing with testimony from environmental regulators, company consultants and officers and health experts, much of it about the threats to the environment and the public from abandoning a hazardous facility with the remediation unfinished. The recycling operation, located about 5 miles from downtown Los Angeles, has not been fully demolished and remains partially enclosed in a temporary, tent-like structure designed to prevent the release of lead and other toxic pollutants.

In his verbal ruling, Sontchi concluded it is not an imminent threat to the public.

“The entire property is not sort of a seething, glowing toxic lead situation,” Sontchi said.

“We have a very dangerous element that will cause long-term health effects” and takes time to accumulate, he said. “I don’t think any of that indicates there’s an imminent, immediate harm to the general public if this property is abandoned.”

State officials blame decades of air pollution from the plant, which melted down used car batteries until its closure five years ago, for spreading lead dust across half a dozen communities, including Boyle Heights, East Los Angeles, Commerce and Maywood. The area contains more than 100,000 people.

A state-led cleanup has so far removed contaminated soil from 2,000 residential properties, as well as as well as parks, day-care facilities and schools. But thousands more have yet to be cleaned in the largest remediation project of its kind in California.

The Trump administration, through the U.S. Department of Justice and the Environmental Protection Agency, supported Exide’s plan, which also leaves behind toxic sites in several other states. Those sites too remain a threat to public health and the environment.

The Justice Department said it received more than 1,000 written public comments in opposition to the proposal, which was released three weeks ago and provided the public eight business days to weigh in. More than 650 people called in to a five-hour public hearing Tuesday, with 125 people giving oral testimony that was “universally and strenuously and sometimes emotionally opposed to approval,” according to a Justice Department filing.

Community outrage did nothing to change the position of the Justice Department, which urged the approval of the plan in a court document a day later, saying it “seeks to salvage a bad situation and avoid the chaos of abandonment” by a company that is “running out of all funding and liquidating.”

California refused to sign on to the settlement, in which the state would receive $2.6 million in exchange for a broad release from liability. The state has already set aside more than $270 million toward cleaning thousands of homes surrounding the facility with elevated levels of lead in the soil.

If California had agreed to the plan, the Vernon property would have been placed into an environmental response trust charged with cleaning the site. Instead, the company moved forward with a “nonconsensual” plan that would impose a release of liability and abandon the property.

Judge Sonchti’s ruling, however, required that California be allowed to file an administrative claim if the property is abandoned. Under the decision, the property may abandoned on Oct. 30, giving the state two weeks to take over the site.

“If they’re unable to transfer this property in the next two weeks, it’s because of their own bureaucracy or their own inability to act,” Sontchi said.

An attorney for the state said it may seek to appeal the decision.

The facility, which sits on a 15-acre site, remains half-demolished and partially covered in a tent-like enclosure of white plastic sheeting, scaffolding, and a negative pressure system designed to prevent the release of lead, arsenic and other hazardous pollutants.

The enclosure requires daily maintenance to prevent tears, according to the state Department of Toxic Substances Control. Earlier this week the department issued a document saying the Vernon site may pose an “imminent and substantial endangerment to the public health or welfare or to the environment,” which officials called a protective measure to give it more power to take steps needed to protect the community from the release of pollution if the site is abandoned.

In court filing earlier earlier this month in support of abandoning the plant, Exide Chief Restructuring Officer Roy Messing said the site is “of inconsequential value and burdensome” because if not sold or abandoned, it would require “significant expenditures in connection with ongoing decommissioning and remediation obligations . . . which would deplete the estate’s limited resources while providing no benefit to the estate or its constituents.”

Messing said in the declaration filed with the court that Exide spent more than $75 million closing the facility and complying with state Department of Toxic Substances Control requirements since 2017 and is currently spending about $750,000 a month to “maintain and secure” the facility.

During the two-day hearing, lawyers for Exide, California and U.S. government sparred over the condition of the site, and would keep the electricity on, pay the contractors maintaining the enclosure around the facility and keep air quality monitors on the facility’s perimeter up and running if it were abandoned.

Peter Friedman, an attorney representing the state Department of Toxic Substances Control, said that Exide was foisting responsibility for the cleanup onto California taxpayers with the and state regulators. He said that “fugitive dust would be free to migrate off site and families living near the Vernon site could not count on being safe, if current safeguards were removed.”

Attorneys for Exide suggested the Department of Toxic Substances Control could use the $26.4 million the company was required to set aside to keep the tent intact and prevent pollutants from getting out. Toxic Substance Control officials said that doing so would burn through that money quickly just maintaining the enclosure, and that all told, it will cost $72 million to make the site safe.

Exide’s attorneys argued the company would soon cease to exist and simply no longer has the money to pay for the cleanup, and that the facility would pose no imminent health threat because the enclosure surrounding it remains intact. They also pointed fingers back at the Department of Toxic Substances Control for being slow to act on the health risks at the site and for issuing a determination that it posed an imminent threat only three days before the hearing to approve the bankruptcy plan.

Judge Sontchi asked California’s attorney “how much can the government sit back and not take action to remediate … and then say abandonment is not appropriate because it’s an immediate, imminent, threat.”

At one point during the hearing, Sontchi questioned how exposure to a dangerous element like lead that builds up in the body over time “somehow qualifies as imminent danger when everywhere you go in your life you’re exposed to lead. We all have lead in our bodies. That’s reality.”

Young children are particularly vulnerable to lead because their brains are still developing and can suffer lifelong harm, including lower IQs, learning difficulties and behavioral problems, from even low levels of exposure to contaminated soil and dust, Dr. Gina Solomon, a UC San Francisco professor of medicine and researcher at the Public Health Institute, testified during Thursday’s hearing.

The Department of Justice, for its part, said abandonment was a “last resort” and sought to blame the outcome on California’s refusal to approve the settlement, which was signed by other states where Exide lead-smelting operations have left behind contamination, including Indiana, Texas and Pennsylvania.

California regulators let the facility in Vernon operate with only a temporary permit for more than three decades despite repeated violations or air pollution limits and hazardous waste rules. The plant shut down permanently in 2015 under a deal between Georgia-based Exide and the U.S. Attorney’s Office for the Central District of California. The company, which at the time was undergoing a previous bankruptcy reorganization, admitted to years of environmental crimes but avoided prosecution by agreeing to close and demolish the plant and clean up the pollution.

Exide began working to close and clean the site in 2017, but stopped in March citing the coronavirus pandemic. The company filed for bankruptcy protection again in May with plans to liquidate its assets.

California regulators have said for years they were building a case and would go after the company and any other responsible parties to recoup funds for the cleanup. But there will no longer be an Exide to pursue.

This story originally appeared in Los Angeles Times.

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