United States Announces Settlement with GM over Onondaga Lake

Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has entered into a Settlement Agreement with a successor trust to Chapter 11 debtor MOTORS LIQUIDATION COMPANY, formerly known as General Motors Corporation, to settle Old GM’s environmental liabilities to the Environmental Protection Agency arising from its releases of hazardous substances at the Onondaga Lake Superfund Site in New York.

The Settlement Agreement was filed late yesterday in Manhattan bankruptcy court.

The Settlement Agreement resolves claims brought by the United States against Old GM under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), commonly known as the Superfund Statute, to recover EPA’s cleanup costs at several areas of the Onondaga Superfund Site. Under the terms of the agreement, EPA will receive allowed bankruptcy claims collectively exceeding $39.2 million. These allowed claims will be paid in part in stock and warrants of GENERAL MOTORS CORPORATION (“New GM”) in an amount to be determined through the bankruptcy. The United States anticipates that, as a function of bankruptcy law, the New GM stock and warrants received by EPA will have a cash value of less than the face amount of EPA’s allowed claim. In addition to this allowed claim of $39.2 million, the State of New York will receive an allowed general unsecured claim of $859,257.

The Onondaga Lake Superfund Site encompasses 185,000 acres and is located in Onondaga County, New York. It consists of the Onondaga Lake, seven major and several minor tributaries, and contamination sources upland of the Lake. In 1952, Old GM bought the Inland Fisher Guide Facility (“IFG Facility”), which is located on the Onondaga Lake Superfund Site.

The United States’ claim alleged that Old GM molded, painted, finished, and assembled metal and plastic automobile parts at the IFG Facility for over four decades.

The claim further alleged that, in the course of those operations, Old GM discharged hazardous substances, including Polychlorinated biphenyls (“PCBs”), polychlorinated dibenzo-p-dioxins and furans, into the soils in and around the IFG Facility. The claim also alleged that Old GM discharged hazardous wastewater containing the same contaminants into Ley Creek, which empties into Onondaga Lake.

The United States previously settled Old GM’s environmental liabilities to EPA in connection with portions of the Onondaga Lake Superfund Site, including the IFG Facility and the adjacent PCB Dredging Site, which were owned by Old GM, and the upper reaches of Ley Creek, which were subject to an existing cleanup order. This prior settlement agreement led to the creation of an environmental response trust to remediate and redevelop contaminated properties formerly owned by Old GM, and allocated cash funding for environmental cleanu and oversight costs in the amount of $22.5 million to the IFG facility, $1.8 million to the PCB Dredgings Site, and $8.5 million to the upper reaches of Ley Creek.

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Dredging Today Staff, May 2, 2012; Image: onondagalake