EXIDE FRISCO BREAKING NEWS: City of Frisco objects to serial polluter Exide’s vague bankruptcy reorganization plan because of concerns Exide officials have not ensured that enough money will be allocated to properly cleanup contaminated lead smelter facility, Stewart Creek, surrounding property
Below is an excerpt from the March 17 filing:
For decades, Exide operated a lead recycling plant in Frisco,Texas. Several years ago, Exide shut down its operations there and sought to exit the state of Texas once and for all. But leaving Texas behind has proven no easy task for Exide as the site on which it formerly operated (as well as surrounding areas) are riddled with environmental contaminants – contaminants dumped by Exide that now pose a threat to Frisco’s constituents if left unremediated.
The cost to undertake and complete the likely minimum clean-up required by applicable regulatory standards is estimated to run in the tens of millions of dollars. By any measure, Exide’s clean-up obligations in Frisco are material, and appear to be among the most significant of Exide’s serial environmental liabilities.
2. Perhaps recognizing the extent of the problems it faced in Frisco, Exide wanted to make a deal. Exide and the City thus came together prepetition and reached an agreement addressing, among other things, Exide’s environmental liabilities in Frisco, the means and terms of the remediation thereof and the future ownership of the Frisco properties – all at significant cost to Frisco (as it was putting up in excess of $40 million). The terms of that accord were set forth and memorialized in that certain Master Settlement Agreement (the “MSA”), an agreement the City hoped would finally serve as the vehicle to fix the problems created by Exide in Frisco.
3. But the commencement of this bankruptcy case has effectively delayed, if not changed, the outcome the City hoped for under the MSA. Since the commencement of this case Exide has given no indication whether it would perform under the terms of the MSA, and/or whether it would assume or reject the MSA. Indeed, even as Exide looks to confirm its Plan just 11 days from now, Exide refuses to share with the City (or creditors generally) what it will do with the MSA, instead reserving its asserted right to make a decision sometime after confirmation.
4. In deferring that decision, Exide’s proposed course violates the express language of the Bankruptcy Code and should not be countenanced. At a minimum, Exide must be directed to make its decision to assume or reject at or prior to “confirmation”, consistent with what is required by section 365. Moreover, Exide’s self-permitted disclosure unfairly impairs the City’s ability to assert and protect whatever rights it may assert as a result of that decision. Again, the City has made repeated efforts to learn the fate of the MSA for that very reason, and each such effort has fallen on deaf ears.
Apart from those shortcomings, Exide’s yet-to-be-determined decision calls into question the feasibility of Exide’s Plan – a Plan that must account for the recent shutdown of Exide’s Vernon, California facility. In the event Exide ultimately rejects the MSA, Exide will not have available to it any of the millions of dollars currently escrowed and earmarked for the remediation of Exide’s environmental liabilities and obligations in Frisco. Accordingly, the feasibility of the Plan is rendered questionable at best because Exide has failed to provide information sufficient to establish that Exide will have the financial wherewithal to remediate Frisco in the absence of such funds (particularly given the proposed “pass through” treatment of environmental liabilities).
5. In short, because the City is, and has been, left in the dark, it files this Objection to ensure that whatever disposition may befall the MSA, the City preserves fully whatever arguments and objections it may assert regarding the Plan. Without a pre-confirmation commitment by Exide regarding the MSA (as well as the additional revisions required to the Plan, as noted below), the City respectfully requests that the Plan be denied.
DALLAS MORNING NEWS EDITORIAL
Bankruptcy solution doesn’t come close to cleaning up Exide’s mess in Frisco
A smokestack at Exide Technologies plant is taken down in Frisco on May 10, 2013. The stack was taken down by crane rather than bulldozed or imploded to minimize dust and other contamination. (Vernon Bryant/The Dallas Morning News)
The city of Frisco is absolutely correct to scrutinize the terms of Chapter 11 reorganization that will allow Exide Technologies to emerge from bankruptcy. As one of the biggest unsatisfied debtors on Exide’s list, Frisco has a huge stake in ensuring Exide and its shareholders, not Frisco taxpayers, are forced to cover the costs of the company’s environmental mismanagement at its Frisco battery-recycling plant.
As a reorganized company, Exide continues to conduct a strong international business, with dozens of foreign manufacturing plants. Two of its five recycling facilities are outside the United States. In order to get away from the kinds of environmental scrutiny its plants have faced in the United States, another recycler, Johnson Controls, simply opted to move its plants into less-prying locations, such as Mexico. And, as is typical of companies that create environmental messes whose cleanup expenses far exceed the company’s ability to pay, Exide can be expected to look for ways to pass as much of that expense as possible to the people left behind. The people of Frisco, that is.
As Dallas Morning News staff writer Valerie Wigglesworth reported last week, Frisco and Exide reached a cleanup deal in 2012 that required the company to clean up contamination on its site, where lead was extracted and batteries recycled for decades. Under that plan, Frisco was to purchase 180 acres of undeveloped buffer land surrounding the plant site for $45 million.
Cleanup of contamination on the buffer land was to occur within 18 months of the Exide plant’s closure, but as Wigglesworth reported, that hasn’t happened. Cleanup of the Exide site itself will take a lot longer and probably cost a lot more. Total cleanup costs could run as high as $130 million, according to some estimates.
The Chapter 11 filing gave Exide temporary protection from its debtors, meaning the people of Frisco were powerless to hold the company to its pre-bankruptcy agreement. It’s still not clear whether Exide will abide by the agreement or whether the reorganization will allow the company to walk away with a sweeter deal.
You can view Exide’s assessment of the situation here. The response doesn’t mention bankruptcy or anything about honoring terms of the 2012 agreement following the reorganization.
Frisco is hardly the only city to experience these woes. And it’s not just battery recyclers who are the big culprits. In Camp Menden, Louisiana, a company that received a big federal contract to extract explosive M6 propellant from U.S. military ordnance — bombs and missiles — collected the explosives in plastic bags and cardboard boxes for years. Instead of properly disposing of the explosives, the company instead just piled the boxes up outside on the company’s 15,000-acre site. The humid, damp weather of northwestern Louisiana did its work.
A handout photo released in 2012 of thousands of tons of M6 propellant, which is used in the firing of artillery rounds, stuffed into plastic bags and piled into sagging cardboard boxes at Camp Minden in Louisiana. Disposal of the propellant, which was owned by a private contractor that declared bankruptcy in 2013, has been problematic. (Louisiana State Police via The New York Times)
One October day in 2012, a series of big explosions shook Minden. That’s what alerted authorities to the environmental mess that the contractor, Explo Systems, had created. The site contains 18 million pounds of explosives, much of which can spontaneously ignite. No one has come up with a good solution for fixing the problem. Explo Systems has effectively walked away, having declared bankruptcy. (Although some company officials were arrested.)
The Environmental Protection Agency wants to burn the explosives in open fires for about 220 days, The New York Times reported last week. Local residents are adamantly opposed to the idea, concerned that the potential for more explosions, along with untold releases of carcinogens from the burning, will put the town in more danger than it’s already in.
It’s a conundrum. The whole idea of Chapter 11 is to give troubled companies some breathing space from debtors so they can reorganize and become more responsible operators. Federal bankruptcy judges must not allow the directors of these companies to walk away from the problems their mismanaged companies created, especially in cases where the reorganized company gets to reopen shop somewhere else and, potentially, resume the same kinds of environmentally dubious practices as before.
DALLAS MORNING NEWS
Frisco fights Exide bankruptcy plan for fear it could hurt cleanup
A smokestack was dismantled in May 2013 at Exide Technologies’ defunct Frisco plant. Contamination remains on and around the property and in the area’s groundwater.
As Exide Technologies moves to emerge from bankruptcy, questions remain about cleanup at its shuttered plant in Frisco despite a heralded agreement between the city and the company in 2012.
Exide has not said whether it will uphold the terms of the agreement, and in a court filing this week, the city of Frisco objected to Exide’s proposed plan of reorganization.
The city’s filing calls Exide’s plan “questionable at best” and raises doubts about whether the reorganized company “will have the financial wherewithal to remediate Frisco” without the funds set aside in the agreement.
The 2012 agreement called for Exide to clean up contamination on its site, where it recycled automotive and industrial batteries for decades. In return, the city would purchase about 180 acres of undeveloped land that surrounds Exide’s former operations for $45 million. The agreement called for cleanup of that buffer land to be finished within 18 months of the plant’s closure, but that hasn’t happened.
City Attorney Richard Abernathy said the city needed to put its position on record with Monday’s filing even as talks with the company continue.
“We are continuing to negotiate and continue to make progress,” he said.
Exide, through a spokesman, declined to comment about its cleanup in Frisco or the city’s latest court filing.
The company is seeking court confirmation of its reorganization plan in hopes of emerging from Chapter 11 bankruptcy. A hearing on the plan is set for March 27 before the federal bankruptcy court in Delaware.
Per the agreement with Frisco, Exide ceased its operations in Frisco in November 2012. It also dismantled many of the buildings on site. But the company’s bankruptcy filing in June 2013 put the agreement in limbo.
“Leaving Texas behind has proven no easy task for Exide,” reads the city’s latest court filing.
Widespread contamination exists on the company’s property, on neighboring properties and in the area’s groundwater. Contaminants include lead, arsenic, cadmium, antimony and selenium.
Battery chips and pieces of a waste material called slag have been found along several miles of Stewart Creek. The creek runs through the plant site and empties into Lewisville Lake.
Four landfills, three that are closed and one that remains in use, are also of concern because they contain hazardous waste.
These areas “are riddled with environmental contaminants — contaminants dumped by Exide that now pose a threat to Frisco’s constituents if left unremediated,” Frisco’s filing states.
State and federal regulators have filed multiple enforcement actions against the company in recent years. Allegations include improper waste management and excessive or unmonitored discharges.
Since November 2010, an area around the plant has been marked for failing to meet the federal air-quality standard for lead. Lead measured in the air has gone down significantly since the plant’s closure. But air quality monitoring must continue until results around the plant show 36 consecutive months of meeting the standard.
The most recent figures, through the end of January, show 25 consecutive months of compliance.
An agency spokesman said Thursday that the Texas Commission on Environmental Quality had recently completed its review of a report Exide filed last year. The report details the type and extent of contamination at its former plant. The agency’s response is still being drafted.
Once that assessment is approved, Exide must spell out how the site will be cleaned up.
That plan must meet the terms dictated by the state in relation to a 2013 enforcement notice. The notice alleged 10 violations related to the plant’s handling and treatment of hazardous waste.
Exide’s legacy of contamination extends far beyond Frisco. But the costs for cleanup in Frisco “appear to be among the most significant of Exide’s serial environmental liabilities,” the city’s filing states. Consultants for the city of Frisco estimated in 2013 that the cleanup would cost from $15 million to $130 million, depending on how it is done.
Earlier this week, Exide agreed to settle a lawsuit over Clean Air Act violations at its lead smelter in Muncie, Ind. Under that agreement, Exide will spend more than $3.9 million to install pollution-control equipment and will pay a civil penalty of $820,000, according to the U.S. Environmental Protection Agency.
Last week, Exide reached a settlement that would permanently close its operations in Vernon, Calif. In exchange, federal officials agreed not to pursue criminal charges involving the illegal storage, disposal, shipment and transportation of hazardous waste there. The company also agreed to clean up its 15-acre site, which is about five miles from downtown Los Angeles. In addition, Exide will put $9 million into a trust fund to clean up contamination in the surrounding neighborhood.
Follow Valerie Wigglesworth on Twitter at @vlwigg.
Texas city objects to Exide restructuring, citing cleanup deal
Thu Mar 19, 2015 6:42am EDT
By Jim Christie
(Reuters) – The city of Frisco, Texas, has objected to batterymaker Exide Technologies’ restructuring plan, saying the plan does not go far enough to ensure there is enough money to clean up pollution at a shuttered lead recycling plant it owns.
Exide’s bankruptcy has cast a cloud over a cleanup deal between the city and the company, Frisco said in court papers filed on Monday in U.S. Bankruptcy Court in Delaware. The city said Exide, which makes lead-acid automotive batteries, should not have the ability to back out of the deal after it exits bankruptcy.
Oracle Follows Texas City In Exide Bankruptcy Objections
Law360, Houston (March 18, 2015, 10:28 PM ET) — Oracle Corp. and the city of Frisco, Texas, have added their names to the list of entities objecting to aspects of Exide Technologies Inc.’s Chapter 11 plan stemming from the battery manufacturing giant’s 2013 bankruptcy.
In an objection filed Wednesday in Delaware bankruptcy court, Oracle argued that a $4 million obligation it’s owed is left out of the supplement to Exide’s reorganization plan, which instead lists a cure amount of $0 tied to licensing, services and other agreements.