Archive for April, 2011

Federal Presence at Environmental Justice Conference

Image courtesy of WILPF. Some rights reserved.

Yesterday, the Department of Energy (DOE) announced that it had “kicked off” The State of Environmental Justice in America 2011, a conference held in Washington, D.C., that runs through tomorrow, April 29th.

Environmental justice, as defined by the conference itself, is “the fair treatment and meaningful involvement of all people—regardless of race, ethnicity, and income or education level—in environmental decision making.”

If it hadn’t been for this announcement, I wouldn’t have known that DOE even had programs devoted to environmental justice. I can’t vouch for the efficacy of the programs, but they have high aspirations:

The Department of Energy (DOE) is committed to environmental justice. We take it seriously. It is a Department-wide activity with Department-wide responsibility. Fair treatment is how we conduct business at DOE. Several of the Department’s Operating Principals memorialize this commitment. We endeavor in all we do to treat people with the dignity and respect they deserve, while keeping our commitments and ensuring safe, secure and environmentally responsible operations.

Well, with one caveat – if you want environmental justice from the DOE, you’d better come prepared:

Meaningful involvement requires that our stakeholders have a working knowledge of the subject matter under discussion, as well as the process for conducting the discussion. In order to be productive participants, all stakeholders must be versed in the subject matter and understand the rules of the process. Otherwise, their participation will not be meaningful.

A little more digging revealed that these programs were developed pursuant to Presidential Executive Order 12898, which was issued in 1994 by Bill Clinton and ordered each and every Federal agency to “make achieving environmental justice part of its mission.” As a part of the Order, the EPA was made head of an Interagency Working Group to help provide other agencies with guidance on developing environmental justice strategies and “identifying disproportionately high and adverse human health or environmental effects on minority populations and low-income populations.” You can read more about the EPA’s environmental justice efforts here.

As for the conference, this year’s theme is “Building the Clean Energy Economy with Equity,” and, in addition to the DOE, brings together representatives from federal agencies such as the Department of Agriculture, the Department of the Interior, and the EPA, as well as participants from academia, business and industry, nonprofits, religious organizations, and local activists.

On the agenda? “Environmental Justice and Lessons Learned from the Gulf Coast Oil Spill,” “Energy Sources & Tribal Matters,” and “Health Disparities” are just some of the panels and discussions offered at this year’s event.

MIT Study Weighs In On Nuclear Storage

Photo by Janine Forbes, some rights reserved

On the 25th anniversary of the Chernobyl disaster, and in the immediate wake of the nuclear crisis at the Daiichi plant in Fukushima following the Japanese tsunami and earthquake, the Massachusetts Institute of Technology published a new study, led by MIT Research Scientist Charles W. Forsberg, that advocates for the storing of used nuclear fuel for potential future reuse as opposed to reprocessing it, which can be seen as more environmentally dangerous.

The process of reprocessing nuclear waste, in which the used fuels are combed through and leftover plutonium and other valuable minerals are chemically separated, was originally proposed in the 1960’s, when plutonium was used solely for weapons. In the 1970’s, the United States government decided that the risks that came along with reprocessing were too great, and decided to instead begin disposing of nuclear waste in vastly deep underground repositories where it would be sanctioned off and out of the way. Since the rise of nuclear power, however, the process has been suggested as a way to increase efficiency and waste at nuclear plants by cycling plutonium directly back into thermal reactors. A more in-depth look at how reprocessing works can be found in the BBC archives, while an extensive rundown of the public safety concerns and scientific and economic downsides that come with nuclear reprocessing can be found on the website for the Union of Concerned Scientists.

In recent weeks, in the wake of the tragedy in Japan, reprocessing again has been suggested by American advocates who believe that reprocessed plutonium could then be substituted for uranium. However, as is suggested in Forsberg’s study, the global supply of uranium is very healthy, with ten times as much uranium surplussed as would be needed to fuel ten times the number of reactors currently on earth for 100 years. An alternative, the study suggests, would be to store used nuclear waste in centralized, high-grade concrete silos located in areas with small population density, where they would still be available for reuse (as opposed to disposing the waste underground) but would avoid any of the safety and health hazards that come with reprocessing.

Attorney General Announces Efforts to Combat Oil and Gasoline Price Fraud

Photo by Damian Cugley. Some rights reserved.

A recent publication from Jones Day brought attention to the forthcoming formation of the Oil and Gas Price Fraud Working Group, where representatives from the DOJ, the National Association of Attorneys General, the CFTC, the FTC, the Treasury, the Federal Reserve Board, the SEC, and the Departments of Agriculture and Energy will come together to fight oil and gas price fraud!

Well, maybe not fight fraud. As of now, all that the Attorney General Eric Holder is asking of these Working Group members is to “explore whether there is any evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentations at the retail or wholesale levels that would violate state or federal laws and that has harmed consumers or the federal government as a purchaser of oil and gas.” (emphasis added)

As Jones Day points out, “This effort only duplicates existing efforts by multiple government agencies, none of which has found any significant evidence of anticompetitive conduct leading to higher prices.” However, Jones Day also concedes that such action “may signal more aggressive enforcement of existing laws.”

Read the Attorney General’s memo containing the announcement here, and his subsequent post on the White House Blog here.

Last Week in Environmental Contingencies and Proceedings Disclosure

As we’ve posted in the past, public companies must generally disclose material legal proceedings in their annual and quarterly reports to the SEC. Today we’ve pulled some disclosures of environmental liabilities from recent filings of interest.

  • GRAPHIC PACKAGING HOLDING CO | Form 10-Q | 4/21/2011

On October 8, 2007, the Company received a notice from the United States Environmental Protection Agency (the “EPA”) indicating that it is a potentially responsible party for the remedial investigation and feasibility study to be conducted at the Devil’s Swamp Lake site in East Baton Rouge Parish, Louisiana. The Company believes it is a de minimis contributor to the site and expects to enter into  negotiations with the EPA and other potentially responsible parties regarding its potential responsibility and liability, but it is too early in the investigation process to quantify possible costs with respect to such site.

East St. Louis, IL—In response to questions regarding environmental conditions at the former East St. Louis operations, Alcoa and the City of East St. Louis, the owner of the site, entered into an administrative order with the EPA in December 2002 to perform a remedial investigation and feasibility study of an area used for the disposal of bauxite residue from historic alumina refining operations. A draft feasibility study was submitted to the EPA in April 2005. The feasibility study included remedial alternatives that ranged from no further action to significant grading, stabilization, and water management of the bauxite residue disposal areas. As a result, Alcoa increased the environmental reserve for this location by $15 in 2005. The EPA’s ultimate selection of a remedy could result in additional liability. Alcoa may be required to record a subsequent reserve adjustment at the time the EPA’s Record of Decision is issued, which is expected in 2011 or later.

  • COVANTA HOLDING CORP | Form 10-Q | 4/20/2011

Lower Passaic River Matter. In August 2004, the United States Environmental Protection Agency (“EPA”) notified Covanta Essex Company (“Essex”) that it was a potentially responsible party (“PRP”) for Superfund response actions in the Lower Passaic River Study Area, referred to as “LPRSA,” a 17 mile stretch of river in northern New Jersey. Essex is one of 71 PRPs named thus far that have joined the LPRSA PRP group, which is undertaking a Remedial Investigation/Feasibility Study (“Study”) of the LPRSA under EPA oversight. Essex’s share of the Study costs to date are not material to its financial position and results of operations; however, the Study costs are exclusive of any LPRSA remedial costs or natural resource damages that may ultimately be assessed against PRPs. In February 2009, Essex and over 300 other PRPs were named as third-party defendants in a suit brought by the State of New Jersey Department of Environmental Protection (“NJDEP”) in New Jersey Superior Court of Essex County against Occidental Chemical Corporation and certain related entities (“Occidental”) with respect to alleged contamination of the LPRSA by Occidental. The Occidental third-party complaint seeks contribution with respect to any award to NJDEP of damages against Occidental in the matter. Considering the history of industrial and other discharges into the LPRSA from other sources, including named PRPs, Essex believes any releases to the LPRSA from its facility to be de minimis; however, it is not possible at this time to predict that outcome or to estimate Essex’s ultimate liability in the matter, including for LPRSA remedial costs and/or natural resource damages and/or contribution claims made by Occidental and/or other PRPs.

  • HONEYWELL INTERNATIONAL INC | Form 10-Q | 4/21/2011

On March 11, 2011, Honeywell resolved a U.S. government investigation into whether the storage of certain sludges generated during uranium hexafluoride production at our Metropolis, Illinois facility was in compliance with the requirements of the Resource Conservation and Recovery Act (RCRA). Per the terms of a plea agreement with the U.S. Department of Justice with respect to a single RCRA count, the Company has paid an $11.8 million fine and will perform supplemental environmental projects to resolve the matter. The Company separately settled parallel civil environmental claims and paid a fine of $690,000 to the State of Illinois.

 The United States Environmental Protection Agency and the United States Department of Justice are investigating whether the Company’s manufacturing facility in Hopewell, Virginia is in compliance with the requirements of the Clean Air Act and the facility’s air operating permit. Based on these investigations, the federal authorities have issued notices of violation with respect to the facility’s benzene waste operations, leak detection and repair program, emissions of nitrogen oxides and emissions of particulate matter. The Company has entered into negotiations with federal authorities to resolve the alleged violations.

 In March 2011, Honeywell voluntarily disclosed to the Virginia Department of Environmental Quality (VADEQ) possible air permit violations at the Company’s Hopewell manufacturing facility relating to the installation of two pieces of replacement equipment in the facility’s sulfuric acid plant and to nitrogen oxide emissions in 2006 and 2007. The Company has agreed to the terms of a consent order proposed by the VADEQ that (i) resolves these possible violations without admission of liability by the Company; (ii) requires the Company to pay a civil penalty of approximately $364,000; and (iii) requires the Company to take corrective measures.

  • NEWMONT MINING CORP /DE/ | Form 10-Q | 4/21/2011

(dollars in millions, except per share, per ounce and per pound amounts)

Midnite Mine Site. Dawn [Dawn Mining Company LLC (“Dawn”) — 51% Newmont Owned] previously leased an open pit uranium mine, currently inactive, on the Spokane Indian Reservation in the State of Washington. The mine site is subject to regulation by agencies of the U.S. Department of Interior (the Bureau of Indian Affairs and the Bureau of Land Management), as well as the United States Environmental Protection Agency (“EPA”).

In 1991, Dawn’s mining lease at the mine was terminated. As a result, Dawn was required to file a formal mine closure and reclamation plan. The Department of Interior commenced an analysis of Dawn’s proposed plan and alternate closure and reclamation plans for the mine. Work on this analysis has been suspended indefinitely. In mid-2000, the mine was included on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In March 2003, the EPA notified Dawn and Newmont that it had thus far expended $12 on the Remedial Investigation/Feasibility Study (“RI/FS”) under CERCLA. In October 2005, the EPA issued the RI/FS on this property in which it indicated a preferred remedy that it estimated to cost approximately $150. Newmont and Dawn filed comments on the RI/FS with the EPA in January 2006. On October 3, 2006, the EPA issued a final Record of Decision in which it formally selected the preferred remedy identified in the RI/FS.

On January 28, 2005, the EPA filed a lawsuit against Dawn and Newmont under CERCLA in the U.S. District Court for the Eastern District of Washington. The EPA has asserted that Dawn and Newmont are liable for reclamation or remediation work and costs at the mine. Dawn does not have sufficient funds to pay for the reclamation plan it proposed or for any alternate plan, or for any additional remediation work or costs at the mine.

On July 14, 2008, after a bench trial, the Court held Newmont liable under CERCLA as an “operator” of the Midnite Mine. The Court previously ruled on summary judgment that both the U.S. Government and Dawn were liable under CERCLA. On October 17, 2008 the Court issued its written decision in the bench trial. The Court found Dawn and Newmont jointly and severally liable under CERCLA for past and future response costs, and ruled that each of Dawn and Newmont are responsible to pay one-third of such costs. The Court also found the U.S. Government liable on Dawn’s and Newmont’s contribution claim, and ruled that the U.S. Government is responsible to pay one-third of all past and future response costs. In November 2008, all parties appealed the Court’s ruling. Also in November 2008, the EPA issued an Administrative Order pursuant to Section 106 of CERCLA ordering Dawn and Newmont to conduct water treatment, testing and other preliminary remedial actions. Newmont has initiated those preliminary remedial actions.

Newmont intends to continue to vigorously defend this matter and cannot reasonably predict the outcome of this lawsuit or the likelihood of any other action against Dawn or Newmont arising from this matter.

 On May 20, 2004, AE, AE Supply, Monongahela and West Penn received a Notice of Intent to Sue Pursuant to Clean Air Act §7604 (the “Notice”) from the Attorneys General of New York, New Jersey and Connecticut and from the PA DEP. The Notice alleged that Allegheny made major modifications to some of its West Virginia facilities in violation of the PSD provisions of the Clean Air Act at the following coal-fired facilities: Albright Unit No. 3; Fort Martin Units No. 1 and 2; Harrison Units No. 1, 2 and 3; Pleasants Units No. 1 and 2 and Willow Island Unit No. 2. The Notice also alleged PSD violations at the Armstrong, Hatfield’s Ferry and Mitchell generation facilities in Pennsylvania and identifies PA DEP as the lead agency regarding those facilities. On September 8, 2004, AE, AE Supply, Monongahela and West Penn received a separate Notice of Intent to Sue from the Maryland Attorney General that essentially mirrored the previous Notice.

 On January 6, 2005, AE Supply and Monongahela filed a declaratory judgment action against the Attorneys General of New York, Connecticut and New Jersey in federal District Court in West Virginia (“West Virginia DJ Action”). This action requests that the court declare that AE Supply’s and Monongahela’s coal-fired generation facilities in Pennsylvania and West Virginia comply with the Clean Air Act. The Attorneys General filed a motion to dismiss the West Virginia DJ Action. On August 12, 2010, the Court granted the motion to dismiss, and the lawsuit has been concluded.

 On June 28, 2005, the PA DEP and the Attorneys General of New York, New Jersey, Connecticut and Maryland filed suit against AE, AE Supply and the Distribution Companies in the United States District Court for the Western District of Pennsylvania (the “PA Enforcement Action”). This action alleges NSR violations under the federal Clean Air Act and the Pennsylvania Air Pollution Control Act at the Hatfield’s Ferry, Armstrong and Mitchell facilities in Pennsylvania. The PA Enforcement Action appears to raise the same issues regarding Allegheny’s Pennsylvania generation facilities that are before the federal District Court in the West Virginia DJ Action, except that the PA Enforcement Action also includes the PA DEP and the Maryland Attorney General. On January 17, 2006, the PA DEP and the Attorneys General filed an amended complaint. On May 30, 2006, the District Court denied Allegheny’s motion to dismiss the amended complaint. On July 26, 2006, at a status conference, the Court determined that discovery would proceed regarding liability issues, but not remedies. Discovery on the liability phase closed on December 31, 2007, and summary judgment briefing was completed during the first quarter of 2008. On November 18, 2008, the District Court issued a Memorandum Order denying all motions for summary judgment and establishing certain legal standards to govern at trial. In December 2009, a new trial judge was assigned to the case, who then entered an order granting a motion to reconsider the rulings in the November 2008 Memorandum Order. On April 18, 2010, the District Court issued an opinion, again denying all motions for summary judgment and establishing certain legal standards to govern at trial. The non-jury trial on liability only was held in September 2010. Plaintiffs filed their proposed findings of fact and conclusions of law on December 23, 2010, and Allegheny must make its related filings on or before February 28, 2011. The District Court will issue its rulings after those filings have been made.

 In addition to this lawsuit, on September 21, 2007, Allegheny received a Notice of Violation (“NOV”) from the EPA alleging NSR and PSD violations under the federal Clean Air Act, as well as Pennsylvania and West Virginia state laws. The NOV, which was directed to AE, Monongahela and West Penn, alleges violations at the Hatfield’s Ferry and Armstrong generation facilities in Pennsylvania and the Fort Martin and Willow Island generation facilities in West Virginia. The projects identified in the NOV are essentially the same as the projects at issue for these four facilities in the May 20, 2004 Notice and the PA Enforcement Action.

 Allegheny intends to vigorously pursue and defend against the Clean Air Act matters described above but cannot predict their outcomes.

FERC Orders $30 Million Civil Penalty in Market Manipulation Proceeding

Photo courtesy of Klearchos Kapoutsis. Some rights reserved.

Yesterday FERC announced that Brian Hunter, former Amaranth Advisors LLC trader, had been ordered to pay a $30 million Civil Penalty inthe first fully litigated proceeding involving FERC’s enhanced enforcement authority under section 4A of the Natural Gas Act.

Section 4A – codified at 15 USC 717c-1 and implemented at 18 CFR 1c, the “Anti-Manipulation Rule” – makes it unlawful for “any entity” to utilize any “manipulative device or contrivance” “in connection with” FERC-jurisdictional transactions.

According to FERC, the record shows that “Hunter’s trading practices […] were fraudulent or deceptive, undertaken with the requisite scienter, and carried out in connection with FERC-jurisdictional natural gas transactions.”

This penalty dwarfs the previous $7.5 million civil penalty levied against Amaranth as part of a 2009 settlement with FERC. Litigation continued against Hunter post-settlement, and in early 2010, FERC published an initial decision determining that Hunter had indeed violated FERC’s Anti-Manipulation Rule.

Yesterday’s Order affirmed the initial decision and decided on the “appropriate” civil penalty, which was concluded to be “sufficient to discourage Hunter and others from engaging in market manipulation.”

Consider me discouraged.

Connecticut Supreme Court: Millstone Won’t Be Mothballed

On April 19th, the Connecticut Supreme Court officially released its opinion in Burton v. Dominion Nuclear Connecticut, Inc., affirming a previous trial court dismissal of the plaintiff’s claims.

The plaintiff, Nancy Burton, sought to prevent the defendant from implementing a so-called “uprate” – an increase in power generating capacity – at the Millstone Nuclear Power Station in Waterford, CT, because the increase “purportedly would cause unreasonable pollution by significantly increasing the discharge of radioactive waste.”

Burton had originally filed a complaint against the defendant, Dominion Nuclear Connecticut (owner and operator of Millstone) in October 2008, seeking an injunction under the Connecticut Environmental Protection Act (CEPA), but the trial court dismissed the case only three months later for lack of standing. This most recent opinion addresses the appeal that the plaintiff filed in March 2009.

No stranger to the courtroom (or to giving nuclear power a hard time!), Burton – a public interest attorney, Connecticut state citizen, and director of the Connecticut Coalition Against Millstone ( – represented herself in the case against Dominion, though it wasn’t the first time the two had faced each other in court.

Burton and Dominion last went head to head in 2004, when Burton acted as the representing attorney for the Coalition in a separate case against Dominion et al. However, one of the defendant’s motion to strike the complaint was granted because Burton, who had signed the complaint, was at the time subject of contempt orders in the US District Court and therefore foreclosed from filing any pleadings.

But drama surrounding players in the case is not limited to Burton alone. Millstone Nuclear Power Station helped put NRC on the cover of Time magazine in 1996, when the regulatory body was called out for “bungl[ing] its mandate” and “overlook[ing] serious problems” in regards to serious safety violations at Millstone that had been ongoing – not to mention neglected and denied – for years. Perhaps in retaliation for such embarrassment, the NRC temporarily shut down Millstone and subsequently fined them a “then-record” $2.1 million.

The March 2011 report by the Union of Concerned Scientists, The NRC and Nuclear Power Plant Safety in 2010, suggests that the Millstone incident marked a real turning point in NRC regulation, prompting the NRC to review and develop stricter regulatory guidance. Yet Millstone has been shut down four times since 1996, and was since ranked in the “bottom third” of all 65 U.S. nuclear facilities in terms of safety, which isn’t adding to Nancy Burton’s peace of mind.

Still – lacking the jurisdiction to consider the claim – the courts dismissed her arguments that the proposed “uprate” will result in increased toxins, carcinogens, and radioactive waste in the Waterford area. The tone and energy of the Coalition’s website, however, suggests that Millstone hasn’t heard the last of Nancy Burton.

You can read a more detailed discussion of the case in this Day Pitney legal alert.

Cornell Study on Natural Gas Causes Controversy

Photo by Oliver Dixon. Some rights reserved.

A new study on the lasting environmental impact of hydraulic fracturing of natural gas published by Cornell University and led by scientist Robert Howath, professor of ecology and environmental biology, found that the process of natural gas extraction may actually be more harmful than extraction processes of coal and other fossil fuels. Hydraulic fracturing has been touted in recent history as a beneficial stepping stone energy source that would bridge the past age of fossil fuel use with the development of future clean energy technology, to the point where President Obama has committed to making it a cornerstone in his larger energy policy.

The process of hydraulic fracturing, commonly known as “fracking,” is as follows: a vertical well is drilled into the earth, and water, sand, and chemicals are pumped down to break up the rocks and free the gas, which is then absorbed (you can find a more in-depth guide to fracking at CNN). Natural gas advocates have championed its benefits, claiming that it burns cleaner than all other fossil fuels, with 50% lower carbon dioxide emission rates than coal and 30% less than oil. However, Howath’s study finds that 7.9% of all methane extracted from shale wells is escaping, whether through intentional venting or from seepage out of pipelines, a worrisome figure because methane, while it dissolves into the atmosphere more quickly, is more efficient at trapping heat. Howath’s study finds that the best case scenario is in fact that these emissions cancel out the benefits of natural gas over other fossil fuels. The larger implications of the study suggest that the overall environmental footprint could end up being 20% greater than that of coal, a figure that could double over 20 years.

An informal EPA study in January predicted much of the study’s findings, noting that the estimate of the negative environmental impact of natural gas fracking has been highly underrated.

Euan Nisbet, a geologist at University of London, noted: “We also need to be very careful to account fully for the greenhouse footprint of conventional gas piped over long distances, for instance in the import of Asian gas to Europe, or Norwegian gas to the UK. The energy choices are not easy.”

Michael A. Levi, senior fellow for energy and environment at the Council of Foreign relations, has emerged as one of many industry insiders who have called the study into question, highlighting four main problems with the Cornell study:

One, that the data sourced from well ends and pipelines is unreliable at best, two, that Howarth doesn’t account in the study for modern gas power generation technology being more efficient than coal generation techniques, three, that there are cheap solutions for most of the problems Howarth highlights that don’t exist in coal technology, and four, that using 20 year global warming potentials instead of the customary 100 in these types of studies distorts the findings.

This final point has been echoed by other advocates of natural gas, including the director of the NRDC’s climate center Dan Lashof, who wrote in a blog post that:

“…while I can see an argument for using a time horizon shorter than 100 years, I personally believe that the 20-year GWP is too short a period to be appropriate for policy analysis because it discounts the future too heavily.  I calculate that over a 50 year period, the GWP of methane would be in the range of 42-56, based on the IPCC and the Shindell et al. analyses.”

New York Times columnist Joe Nocera added his own skepticism over the study to the growing hubbub in an editorial last week, addressing Levi’s third point:

The truth is, every problem associated with drilling for natural gas is solvable. The technology exists to prevent most methane from escaping, for instance. Strong state regulation will help ensure environmentally safe wells.”

What the larger implications of this study are exactly remain to be seen, however it’s clear that Howath and his colleagues have succeeded in at least causing a stir amongst industry insiders and activists alike with their findings.

EPA Loses $1.6 Billion in Federal Funding

Photo by 依靈. Some rights reserved.

A memo from Marten Law last week showed just how the recent budget deal affected environmental and resource management programs at the federal and state level.

Under the FY2011 Appropriations Act, cuts were made to EPA’s drinking water programs, wastewater projects, programs relating to climate change, and more.

The Department of the Interior also suffered drastic cuts.

For more details, read the Marten Law memo.

BLM’s Fresh Look at Oil Shale and Tar Sands

Photo by gordasm. Some rights reserved.

Late last week, the DOI’s Bureau of Land Management published a notice in the Federal Register expressing their intent to prepare a Programmatic Environmental Impact Statement (EIS) forAllocation of Oil Shale and Tar Sands Resources on Lands Administered by the BLM in Colorado, Utah, and Wyoming.

This new planning initiative takes a fresh look at a 2008 Programmatic EIS and Record of Decision that opened up more than two million acres of public land for leasing and development of oil shale and tar sands. The BLM “intends to take a hard look at whether it is appropriate for approximately 2,000,000 acres to remain available” for such development.

Last week’s notice kicked off the public input process – input that BLM promises will be a “vital component” of the oil shale development program going forward. Several “scoping” meetings have been scheduled in the areas under consideration, and comments on the project can be submitted here. You can keep a close eye on BLM’s Oil Shale & Tar Sands plans here.

GM’s Toxic Secret: RACER Trust’s Contaminated Properties

Did you know? In October of 2010, “Old” General Motors – now Motors Liquidation Company (MLC) – signed a settlement agreement with the United States (along with 14 states and one tribal government) establishing an environmental trust “to address contamination and position for redevelopment 89 industrial plants and other properties used by the former General Motors but left behind in its 2009 bankruptcy.”

Photo by eek the cat. Some rights reserved.

The Revitalizing Auto Communities Environmental Response (“RACER”) Trust became effective on March 31, 2011.

Of the 89 properties administered by the Trust, 59 are known to have been contaminated with hazardous substances or waste, and, of those, 15 are listed as “priority” sites. “Old” GM has contributed $773 million in assets to the fund, which will go toward the cleanup and administration of the properties and “their return to beneficial use.”

Worried about how bankrupt GM could afford such a bill? Don’t fret – by July of 2009, MLC had been lent $1.175 billion (“for the orderly winding down of MLC’s affairs”) by the US Treasury and Export Development Canada collectively.

At least this money is going to good use: the restoration of these properties provides an opportunity to “restore prosperity and return jobs to areas hit hardest by GM’s reorganization.” More than half of the funds in the Trust will go towards remediation of sites in Michigan and New York. For more information on specific properties, see the RACER Trust Properties Map.

You can find the terms of the Trust in the Environmental Response Trust Agreement, a copy of which was also filed along with MLC’s April 4th, 2011, Form 8-K. Alternatively, you can read an elegant summary of the news in this Pepper Hamilton Alert.

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