For immediate release: Oct 20, 2010
Posted by: [Attorney General]
Contact: Bryan Corbin
Phone: (317) 233-3970

AG: Settlement filed to pay for environmental cleanup of Old GM sites

$25 Million in trust created to pay for industrial remediation at eight Indiana sites

INDIANAPOLIS - The proposed settlement of the General Motors bankruptcy case filed today will provide more than $25 million in an environmental trust to clean up and redevelop eight Old GM manufacturing facilities in Indiana, Attorney General Greg Zoeller and Indiana Department of Environmental Management Commissioner Thomas Easterly announced today.

"The old General Motors provided manufacturing jobs in Indiana for generations, and we can only hope that the emergence of the New GM from bankruptcy will mark a return to stability for one of the nation's great automakers. In the meantime, cleaning up industrial pollution that would be an obstacle to redevelopment so that some Old GM sites are poised for future manufacturing is an appropriate resolution to a complicated bankruptcy," Zoeller said.

"IDEM has worked in conjunction with U.S. Department of Justice, U.S. EPA and the Office of the Indiana Attorney General to review known environmental issues at each of the properties, negotiate cost estimates for their further environmental investigation and cleanup, and provide the basis for the amount to be placed in the Environmental Response Trust," said Commissioner Easterly. "The staff members of IDEM's hazardous waste site remediation program and I want to recognize and thank all of these parties for working with us to ensure a settlement that will benefit Hoosiers and our environment."

In one of the largest and most rapid bankruptcy cases in U.S. business history, ailing General Motors Corporation in June 2009 filed for Chapter 11 reorganization, and weeks later a federal bankruptcy court in New York approved the sale of selected production facilities. A new entity, General Motors LLC or "New GM" was created and purchased the most optimal of GM's automaking facilities in order to continue production, including the name "General Motors." The Old GM, renamed Motors Liquidation Corporation (MLC), agreed to use bankruptcy proceeds to remediate or liquidate 89 remaining MLC-owned manufacturing facilities not sold to New GM. Many of the sites no longer were in production and contain years of industrial chemical pollution requiring extensive remediation before the sites can be put to other industrial uses.

Today, Indiana along with 13 other states and the U.S. Environmental Protection Agency filed a proposed settlement of the bankruptcy case with MLC that allocated federal funding from GM's original federal bailout. Of that, $499 million will be used to create an Environmental Response Trust that will acquire and pay to clean up the Old GM properties, and another $142 million will assist states and communities with other costs, such as plant security, redevelopment, demolition and property taxes. MLC will contribute another $120 million in non-cash assets to the environmental trust, for an overall total settlement of approximately $773 million. The proposed settlement includes provisions so that Indiana and other states can oversee and monitor environmental cleanup of the sites by the court-appointed trustee and redevelopment managers and implement changes if conditions warrant.

Lodging the notice of the proposed settlement with the Bankruptcy Court is the first step in an upcoming 30-day public-comment period, after which the court can accept the agreement.

Under the proposed MLC bankruptcy settlement filed today, approximately $25 million of the trust is being allocated to cover the costs of rehabilitating eight Indiana industrial sites by removing or remediating pollutants and other hazards so that the facilities meet modern environmental codes and can be repurposed for different manufacturing operations. The eight Indiana sites included in this settlement are:

. MLC Site 1288, Former GM Delco Plant 5, 1723 N. Washington Street, Kokomo.
. MLC Site 1316, Manual Transmissions of Muncie, 1200 W. 8th Street, Muncie.
. MLC Site 1191, Metal Fab - Indianapolis, 340 White River Parkway, Indianapolis, also known as GM Stamping.
. MLC Site 1325, a settling basin that was closed as a hazardous waste landfill at the former GM Allison Gas Turbine facility, 2701 W. Raymond Street, Indianapolis.
. MLC Site 1320, Delphi I Anderson, 2915 Martin Luther King Blvd., Anderson.
. MLC Site 1234, Venture 2000 Property, 2915 Pendleton Ave, Anderson.
. MLC Site 1329, a 1-acre fire suppression lot still owed by MLC and located on a former GM facility in Anderson.
. Various residential properties in Bedford, Indiana.

Since the GM metal fabrication plant in Indianapolis is owned by the Old GM but leased to the New GM, the funding includes the environmental cleanup and removal of pollutants at this site, in light of New GM's intention to discontinue production there and close the plant. The administrative funding also may be used to market the site for future redevelopment.

Allison is currently a GM parts supplier; and the six other Old GM sites are not currently in production. Remediation could include removing soil, cleaning up spills of chemicals, cleaning on-site wastewater treatment plants or correcting groundwater contamination.

Without the proposed settlement, Indiana -- if treated as a mere unsecured creditor -- would have received only a fraction of its claims in the Old GM bankruptcy. Instead, the proposed settlement creating the environmental trust provides a $25 million cleanup funding source, according to Deputy Attorney General Timothy Junk, who helped negotiate it.

Zoeller added, "The federal government's decision to bail out General Motors rather than to allow its liquidation was a policy decision that will be debated for decades to come. In Indiana, our priority is creating an economic framework that supports manufacturing jobs; and removing wastes from industrial sites is one pillar of that framework. These are federal dollars, not state dollars, that ultimately will be used to ensure MLC properly cleans up the Old GM sites; and under these unusual circumstances the settlement is necessary."

Although not part of this proposed settlement, MLC and the governments are still negotiating for the cleanup of the former GM facility at Scatterfield Road in Anderson, Indiana. The parties hope to conclude a separate settlement in the near future.

Another toxic legacy involves mercury switches in most vehicles manufactured before 2003. If not removed before the metals are melted for re-use, the mercury in the switches would be released into the environment. "Although not part of this settlement, MLC and New GM have separately agreed to cover the ongoing costs of paying salvage yards to remove mercury switches from used vehicles prior to scrapping them. Removing toxic mercury from the scrap-metal stream before it is melted will reduce mercury levels from steel production," Junk said.

The proposed settlement of the Old GM bankruptcy case was filed today in U.S. Bankruptcy Court for the Southern District of New York. Reaching the settlement with MLC were the states of Indiana, Delaware, Illinois, Kansas, Massachusetts, Michigan, Missouri, New Jersey, New York, Ohio, Wisconsin, Virginia, Louisiana and Pennsylvania.

Serving as legal counsel to the Indiana Department of Environmental Management, Zoeller's office previously has negotiated agreements involving environmental cleanups of industrial sites to restart or maintain manufacturing to help create or keep jobs in a community:

. In October 2009, the Attorney General's Office worked out a public-private partnership agreement and stock sale to fund cleanup of pollutants at the former Dana Corp. site in Angola, Ind., so that Univertical Corp. could maintain its operations there.

. In December 2009, the Attorney General's Office transferred $500,000 left over from the cleanup of a landfill in Connersville, Ind., to remediate the former Ford-Visteon industrial site, where Carbon Motors Corporation plans to open its new police-car manufacturing facility.

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