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 (“Old GM”), formerly known as General Motors Corporation, to settle Old GM’s environmental liabilities to the Environmental Protection Agency (“EPA”) 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 cleanup 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. 

Yesterday’s settlement resolves Old GM’s remaining environmental liabilities to EPA at the Onondaga Lake Superfund Site.  Under the agreement, EPA is receiving the following allowed general unsecured claims:  $38.3 million for environmental cleanup at the lower reaches of Ley Creek; $438,448 for unreimbursed past and future oversight costs at Onondaga Lake; $113,248 for unreimbursed past and future oversight costs at the Salina Landfill; $234,475 for unreimbursed past costs at the IFG Facility; and $110,395 for unreimbursed past costs at the PCB Dredgings Site.  In addition, the State of New York will receive an allowed general unsecured claim of $859,257.

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In June 2009, Old GM – then the second-largest automotive manufacturer in the world – and three wholly-owned subsidiaries filed Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York.  The same day it filed for bankruptcy, Old GM also filed a motion to sell substantially all of its assets to a newly formed corporation, now known as General Motors Company (“New GM”), which was approved by the Bankruptcy Court in July 2009.  Old GM thereafter filed a plan of liquidation, which was confirmed by the Bankruptcy Court on March 29, 2011.  Old GM has since dissolved and transferred its remaining assets and liabilities to various successor trusts.

The United States filed proofs of claim against Old GM and its affiliated debtors for environmental liabilities at over 100 sites.  The United States also sought civil monetary penalties for violations of the Resource Conservation and Recovery Act and the Clean Air Act. The settlement filed yesterday is the twelfth in a series of settlements of Old GM’s environmental liabilities that have recovered approximately $899 million in cash, allowed general unsecured claims, and other assets for cleanup of contaminated sites across the nation. 

Before being considered by the bankruptcy court for approval, this twelfth settlement agreement will be lodged with the bankruptcy court for a period of 30 days and published in the Federal Register to provide public notice and to afford members of the public the opportunity to comment on the settlement.  The settlement is subject to the approval of U.S. Bankruptcy Judge Robert E. Gerber.

Mr. Bharara praised the EPA and the Justice Department’s Environment and Natural Resources Division for their extraordinary work on this case.

This case is being handled by the Office’s Environmental Protection Unit and Tax and Bankruptcy Unit.  Southern District of New York Assistant U.S. Attorneys David S. Jones and Natalie N. Kuehler, along with Alan S. Tenenbaum and Patrick M. Casey of the Environment and Natural Resources Division of the Department of Justice, are in charge of this case.

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