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Saturday, August 08, 2009
Environment - "GM gets to dump its polluted sites;" Indiana impacted
Some quotes from a lengthy story today in the Detroit Free Press, reported by Tim Higgins:
When General Motors Co. emerged from bankruptcy, it was freed of obligations for polluted properties at discarded plant sites that will require millions of dollars to clean up.This graphic that accompanies the story shows that Indiana has more GM properties (44) than even Michigan (40).GM’s unusual, government-engineered bankruptcy allowed the Detroit automaker to emerge as a new company — and to shed billions in liabilities, including claims that governments had against GM for polluting.
Environmental liabilities estimated at $530 million were left with the old GM, which has only $1.2 billion to wind down.
Administrative fees and other claims will soak up that money, and state and local officials told the Free Press they fear the cleanups will be shortchanged.
In Flint, uncertainty over cleaning up Buick City threatens a three-year redevelopment effort. “We can’t lose this opportunity to create more jobs,” said Tim Herman, chief executive officer of the Genesee Regional Chamber of Commerce.
The State of New York is concerned about 12 GM sites, including a 270-acre site along the St. Lawrence River that possesses a “significant threat to human health.” Sites in Ohio, Delaware, Indiana and Colorado also have raised concerns.
GM said the issue rested with Motors Liquidation Co. — what’s left of the old GM — which declined to comment.
Companies have gone bankrupt before, leaving behind expensive messes, but the size of the environmental liabilities shed by GM is extraordinary, said John Pottow, an expert in bankruptcy law at the University of Michigan. * * *
Officials fear the practical outcome of GM's bankruptcy on their local sites will be large chunks of land sitting unused with no way to clean them up, hindering economic-development efforts.
"It's very, very difficult to get another company to come in and take over a property where there is a legacy contamination problem that has remained unaddressed," said Robert McCann, a spokesman for the Michigan Department of Environmental Quality.
"That would ultimately shift the likely cleanup to the state, but our cleanup program is more or less out of money at this point, so we don't have the resources to do it, either."
In GM's bankruptcy, an unusual so-called 363 sale allowed the company to sell its valued assets to a new company largely owned by the U.S. government. * * *
Chrysler Group LLC, which underwent a similar bankruptcy sale, also left behind environmental problems with its old company, according to Chrysler's master transaction agreement. These would include the Sterling Assembly and Detroit Axle plants, among others, but taken together, do not reach the scale of GM's unwanted sites.
GM's unwanted assets include 16 factories being closed and about 100 other properties, including Buick City.
Al Koch, who is overseeing the wind-down of the old GM, said during the bankruptcy hearings that the properties being left behind have an estimated environmental liability of $530 million. Motors Liquidation declined to comment.
Although other manufacturers have gone broke and left behind polluted sites, John Pottow, an expert in bankruptcy law at the University of Michigan, said GM's case was extraordinary because of its size.
"It's one of the largest liquidations," he said in an e-mail. "The real largest liquidation is Lehman Brothers, but investment banks don't tend to have lots of environmental liabilities. Manufacturing companies -- things that use gooey chemicals -- do."
Posted by Marcia Oddi on August 8, 2009 05:41 PM
Posted to Environment