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Vernon-based Exide Technologies to shut down permanently under deal with US Attorney

Exide Technologies, a lead battery recycler in Vernon, will shut down for good as the result of a negotiated settlement with the U.S. Attorney’s office.

“We have reached a deal with Exide that will result in the immediate and permanent closure of the battery recycling plant,” said spokesman for the U.S. Attorney’s office Thom Mrozek. “It's a complicated deal, but we think it will ensure that money is available to pay for tens of millions of dollars in cleanup efforts.”

"The agreement to close the plant is the best outcome for the health of exposed residents. It is the best outcome for society," L.A. County Supervisor Hilda L. Solis said in a statement.

Company admits federal crimes

The terms of battery recycler Exide's agreement with the Department of Justice were laid out Thursday morning. 

Under the settlement, Exide Technologies will avoid federal criminal liability for illegal disposal, storage, shipment and transportation of hazardous waste. The company admitted to committing all four felonies, over at least two decades. Each instance of each felony would carry a maximum half-million dollar fine. 

"Without this agreement, Exide, which is currently in bankruptcy, would almost certainly cease to exist," said acting U.S. Attorney Stephanie Yonekura. "And it would be liquidated if it still faced the threat of criminal prosecution."

Joe Johns, a prosecutor in the environmental crimes division, put a finer point on it. "You all would have picked up the, I guess, the price tag at that point. We all would."

Exide could be  prosecuted for the offenses it has admitted to anytime within the next 10 years, if it fails to complete a robust clean-up effort. 

Clean up plans

The federal agreement is tied to an earlier deal Exide made with the California Department of Toxic Substances Control. Exide must: 

  • Guarantee at least $38.6 million for safe closure and cleanup of the plant, including $11 million in a surety bond;
  • Set up a $9 million trust fund to be used to clean the area around the facility, including 216 homes in Boyle Heights and Maywood;
  • Pay for blood tests for area residents; and
  • Notify the community, as well as federal and state lawyers, of its clean up efforts.
The DOJ estimates Exide's total costs to exceed $100 million. According to their statement:

Environmental health and testing underway

Under DTSC supervision, Exide has begun testing and cleaning up 216 residential properties north and south of the plant. Thirty-eight are cleaned up so far; 77 are awaiting cleanup; and regulators are awaiting tests on 34. According to state toxics officials, owners of more than sixty properties haven't yet agreed to testing. 

Angelo Bellomo, director of the environmental health division for L.A. County Public Health, says that the testing area may expand. "There's no reason to limit our attention to the homes in the northern and southern assessment areas. We have to be open to identifying contamination wherever it exists in the community surrounding the Exide facility." 

Community celebrates, warily

"Our long nightmare is over," said Monsignor John Moretta, pastor of Resurrection Church in Boyle Heights. "We have attended dozens and dozens of meetings and hearings, always fighting for what we saw as something obvious: Exide was poisoning our community and it had to be closed."

But neighbors to the plant say they're still concerned about cleanup and their health. The DTSC had allowed Exide to operate for more than 30 years with only a temporary permit.  

Moretta acknowledged that civil lawsuits may still be underway. "You're going to hear more about that in coming months," he said.

Activists are planning to hold a rally to press for the speedy enforcement of the agreement on Thursday night at 7 p.m. at 1271 S. Indiana St. in East Los Angeles.

In the City of Commerce, about a mile from the plant, Max Galván was walking to a bus stop with his toddler-aged son.

“That’s good that they’re closing it down,” he said. “Even though we’re losing jobs, still. We’ve got kids. I mean, safety comes first, right?”

Across the street, at the offices of East Yard Communities, one of the groups leading the charge to shut Exide down, director Mark Lopez said the announcement came as a surprise.

“We knew this was in the works,” he said, referring to the Department of Justice’s criminal investigation. “We didn’t know that it would result in this shutdown.”

In fact, he said he was at home on Wednesday night and had just drafted a letter to DTSC director Barbara Lee in advance of a Thursday meeting at the agency when his phone and Facebook account started blowing up.

Lopez said he was elated to hear the news, but said his organization’s fight would continue.

“Just because Exide is shutting down, doesn’t mean that the cleanup is guaranteed,” Lopez said. “So we still have to pressure DTSC to follow through with comprehensive testing so we understand the full extent of the issue, and then full cleanup.”

He also said it reflected poorly on state regulators that it was the federal government that managed to force Exide’s closure.

“DTSC failed us,” he said. “They’ve been holding the permit application for Exide. They could’ve rejected the permit by now and demanded the shutdown of Exide. So at the end of the day, that required the federal government to come in and do DTSC’s job.”

He said now that Exide is out of the way, he hopes state regulators will be more aggressive in ensuring a quick cleanup of the site.

DTSC also came in for criticism from other groups.

Following announcement of the agreement, Santa Monica-based Consumer Watchdog said the agency needed top-to-bottom reform.

“This is a major victory for the people of east Los Angeles,” said the group's Liza Tucker. “But DTSC allowed Exide to pollute the community with impunity for two decades and was even considering granting them a permit when the US Attorney shut them down. Either this agency is reformed from top to bottom or it needs to go. No toxic regulator would be better than one that allows serial polluters to keep polluting without denying or revoking permits.”

Exide Technologies is currently working through a Chapter 11 bankruptcy filing. Yonekura says the agreement should allow the company to emerge from bankruptcy and remain a viable company with revenue from its other operations around the world. 

In a statement, Exide president and CEO Robert Caruso said the agreement "should allow us to resolve key conditions to funding of the backstop commitment agreement, and to continue to pursue plan confirmation. We recognize the impacts that closing the Vernon Facility will have on our approximately 130 employees and their families.  On behalf of the Company, I thank them and the United Steel Workers Union for their commitment and dedication."  

Read the full agreement below: 

Past breaches

Last August, a federal grand jury began investigating Exide over air emissions and the transportation of hazardous materials. The company revealed the investigation in a quarterly filing with the Securities and Exchange Commission. Exide sought protection from creditors in a Delaware bankruptcy court nearly 2 years ago. In its most recent public comments, the company announced it intended to emerge from Chapter 11 bankruptcy by the end of March. 

"Exide operated for too long with a temporary permit and that is something that should have never happened. And it certainly shouldn’t happen again," Solis said.

A spokeswoman for Exide reached Wednesday night said the company would not confirm a settlement, and would offer no comment.

Neighbors to the plant in Boyle Heights, Vernon and Maywood have sought to shutter the plant ever since a study released by the South Coast Air Quality Management District revealed significantly elevated cancer risk for more than 100,000 people living and working near the plant.

Exide, one of two lead battery smelters west of the Mississippi, has long insisted it was working diligently to reopen. But last week, AQMD board members okayed tighter restrictions for air emissions from Exide and Quemetco, located in the City of Industry.

The Department of Toxic Substances Control is overseeing cleanup of properties around Exide. As of Monday, DTSC contractors have cleaned up 38 of 216 homes north and south of the plant, with 34 homes awaiting test results, 77 homes in line for cleanup, and 54 homes awaiting initial tests.

For their part, AQMD officials said they planned to continue $60 million civil lawsuit against Exide for past violations of air pollution regulations.

“The Exide facility has been a serious and serial polluter,” said Barry Wallerstein, executive officer for the South Coast Air Quality Management District. “We will continue our work with all agencies involved to ensure there are not adverse impacts to the environment from the closure operations."

This story has been updated.