Poison to the People!
GM gets to dump its polluted sites
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.
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
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.
Who will pay for cleanups?
MASSENA, N.Y. -- The estimated cost of cleaning up years of General
Motors' dumping of toxic sludge along the St. Lawrence River in upstate
New York goes as high as $225 million -- perhaps the largest
environmental liability among the 100 or so factory sites GM jettisoned
in its bankruptcy reorganization.
Closer to home, in Flint and surrounding Genesee County, leaders say
environmental liabilities the new GM was allowed to shed are threatening
their efforts to redevelop Buick City, the site of a large assembly
facility that closed in the late 1990s.
Local leaders around the country fear that there isn't enough money in
GM's $1.2-billion bankruptcy wind-down budget to cover the cleanup of
factory sites that are not part of the new GM, that there's no plan for
cleanup and that the bill will fall on taxpayers.
No local money for cleanups
Massena, a factory town of about 13,000 along the Canadian border, was
home to a powertrain plant that used hazardous chemicals in the 1960s
and '70s that were dumped on the 270-acre site. It is in a county with
an unemployment rate of 10.2%, one of the highest in New York.
"We could go 200 years, and Massena is not going to have enough money to
pay for this," said Jason Clark, who heads the area's business
Bill Winiarski, chairman of the area authority trying to redevelop Buick
City in Flint, wants the federal government to set up a system that
allows communities to have a say in the redevelopment of the GM
properties and for any purchaser to avoid liabilities for previous
"In my humble opinion, the environmental problems that go along with
that property were purchased by the federal government when they
purchased General Motors," he said. "The federal government should now
own those problems and not try to pass them on to a developer."
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."
New company isn't liable
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.
That new company is not legally responsible for the sites it left behind
in bankruptcy, U.S. Bankruptcy Judge Robert Gerber decided last month.
The old sites are part of Motors Liquidation Co., which has $1.2 billion
to sell off unwanted property and wind down operations.
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."
Old GM may not have funds
Lawyers working on objections to GM's plans say bankruptcy lawyer fees
alone could eat up a good portion of the GM wind-down budget, leaving
little money for liabilities against the company.
GM estimated before bankruptcy that it had $1.9 billion in future
liabilities for claims related to asbestos, product liability and
additional litigation. In addition, the company estimated that unions
other than the UAW were owed more than $3 billion in retiree health care
and hundreds of millions more for retiree life insurance.
The New York Attorney General's Office, seeking to protect environmental
claims for cleanup at Massena and other sites, argued that federal and
state regulatory requirements should not be eliminated by a bankruptcy sale.
"Congress very specifically placed governmental entities in a different
position than other entities in a bankruptcy," Maureen Leary, a lawyer
New York Attorney General's Office, argued to the court.
But Gerber ruled otherwise.
John Privitera, a lawyer for the St. Regis Mohawk Tribe, which has land
next to the Massena plant, said the U.S. government should take on the
cleanup, which he estimates at $225 million. The Environmental
Protection Agency puts the price at $60 million, though residents
contend that is a partial cleanup.
"Our position is that the United States government, as the conductor of
this orchestra where everything has been restructured and the owner of
Newco, has a fiduciary obligation to the public, to the environment," he
The EPA is working with states to "identify any environmental cleanup
requirements that existed at the time of bankruptcy, and initiated
communications with Motors Liquidation," Deb Berlin, a spokeswoman, said
Outlook in Michigan
In Michigan, officials have expressed worry about unspecified GM sites,
though much of their concern seemed to be with properties transferred to
the new GM.
"The concern is that there will not be sufficient value left in the
estate to deal with GM's environmental liabilities," Celeste Gill, a
lawyer the Michigan Attorney General's Office, said in court records.
"At this point, it is unknown how any proposed plan will address them."
Officials in Flint and Genesee County said the issue of environmental
liability threatens to derail efforts to redevelop Buick City, which
composes 220 of the roughly 1,000 acres in the county that GM shed.
The regional chamber of commerce said it has worked for three years to
redevelop Buick City and has an interested investor, whom officials
declined to name. The buyer envisions a $25-million project to create a
logistics facility that would create up to 600 jobs.
"Our economic future is at stake," said Tim Herman, chief executive of
the Genesee Regional Chamber of Commerce.