Recycling plant cleanup may cost state $650M after owner’s bankruptcy

After the outrage came the price tag. Days after a bankruptcy court in Delaware allowed Exide Technologies to abandon its battery recycling plant outside Los Angeles, the California state auditor reported cleaning up the area could cost the state $650 million.

"The cleanup project is likely to cost hundreds of millions of dollars more than the state has provided DTSC [Department of Toxic Substances Control] to date," State Auditor Elaine Howle wrote on Tuesday in a letter to Gov. Gavin Newsom and the state's legislative leaders.

She added, "Although the state expected it would recover its costs from Exide, in October 2020 a federal court approved a bankruptcy settlement that leaves significant questions about the state's ability to obtain reimbursement for the cleanup."

According to the report, as of June the state had given the department nearly $260 million to clean up the site and the surrounding area of lead and heavy metals. But the report estimates "the total cost of the cleanup project will approach $650 million."

The 15-acre site was used to recycle lead acid batteries for about 90 years. Georgia-based Exide bought the facility in 2000, then agreed to close it in 2013. In court documents, the company said it has spent tens of millions on cleanup efforts.

Howle's office said the department had failed to budget the labor costs of cleanup projects and signed deals that made the state -- not the contractors carrying out the work -- responsible for cost overruns.

In a written response, department Executive Director Meredith Williams said her agency has already begun implementing some recommendations, such as improving processes for estimating costs and prioritizing cleanup of schools and day care centers. But Williams also wrote the cleanup is a difficult and unpredictable task.

"DTSC has cleaned up more properties, more quickly than any other residential lead cleanup in the nation," she wrote.

Exide did not respond to an email seeking comment.

On Oct. 16, District of Delaware Chief Bankruptcy Judge Christopher S. Sontchi approved a Chapter 11 settlement allowing Exide to abandon its battery recycling facility in the city of Vernon. The U.S. Department of Justice supported the deal, but California opposed it. In a court hearing, Sontchi said the site posed no imminent threat to surrounding residents. In re: Exide Holdings Inc., 20-11157-CSS (D. Del. Bankruptcy Ct., filed May 19, 2020).

"None of the global settlement parties, nor any other party in interest, other than the California DTSC, has opposed the debtor release," Sontchi wrote.

Vernon residents and environment groups responded with a protest at a federal courthouse in Los Angeles days later. Some threw plastic bags of dirt they said they gathered from the site onto the courthouse steps.

On Friday, U.S. District Judge Richard G. Andrews denied a motion for a stay on Sontchi's ruling pending an appeal filed by attorneys with the California Department of Justice.

Last year, Newsom signed AB142, which removed a 2022 sunset date on part of a $2 fee charged on the sale of new lead acid batteries. AB 142 amended AB 2153, a 2016 law that increased the fee with the goal of providing $32 million annually to clean up the Exide plant and similar sites.