Exide Technologies will immediately begin shutting down its embattled battery recycling plant in Vernon after reaching an agreement, which federal officials announced Thursday, that allows the company to avoid facing criminal prosecution for decades of pollution.
Under the deal between federal officials and the company, Exide acknowledges criminal conduct, including the illegal storage and transportation of hazardous waste. Company officials will avoid criminal charges in exchange for shutting down, demolishing and cleaning the 15-acre battery recycling plant about five miles southeast of downtown Los Angeles.
“The reign of toxic lead ends today,” acting U.S. Atty. Stephanie Yonekura said Thursday. “After more than nine decades of ongoing lead contamination in the city of Vernon, neighborhoods can now start to breathe easier.”
Federal officials on Thursday detailed their investigation of Exide and its two decades of illegal waste disposal and other environmental crimes. The U.S. attorney's office defended its agreement to force the facility's closure in exchange for dropping the prosecution.
Yonekura said that without the agreement, Exide, which is in bankruptcy, "would almost certainly cease to exist. And it would be liquidated if it still faced the possibility and threat of criminal prosecution."
"The government would be left holding the bag for the cleanup and remediation," Yonekura said. "In short, this is the best solution for a very difficult environmental problem."
She said the agreement will produce improvements in the environment for thousands who live near the Vernon plant, including less lead, arsenic and other cancer-causing agents in the air and water.
In a statement, Exide officials said the agreement would allow the company to emerge from bankruptcy and meet its obligations to close and clean up the plant while preserving approximately 10,000 jobs at its facilities globally.
"We recognize the impacts that closing the Vernon facility will have on our approximately 130 employees and their families," Robert M. Caruso, president and chief executive of Exide Technologies, said in the statement. "On behalf of the company, I thank them and the United Steel Workers Union for their commitment and dedication."
The agreement with Exide does not require additional funds for cleanup beyond nearly $50 million in payments outlined in a fall 2014 settlement with state regulators. But the agreement accelerates payments into trust funds. It also extends an ongoing program to test surrounding residents for lead poisoning.
Federal officials insisted the agreement would require the company to pay the cost of the entire cleanup, even if it exceeds $50 million.
If the company does not comply at any point within the next 10 years, it will be prosecuted for felonies it has already admitted to, they said.
“They’re on the hook with this agreement to pay whatever it takes to clean that site up,” said Joseph Johns, assistant U.S. attorney and chief of the environmental crimes section.
Johns said he would have liked to secure a conviction and penalties against the company. But prosecuting the company would have resulted in its liquidation, leaving taxpayers to pay for the cleanup.
“We decided that the balance of justice required us to think out of the box,” Johns said. “We struggled with this, and we decided that the right thing to do was not worry about sending one or two people to jail for a year or two, but rather, to prevent another 50-to-100-year sentence for the 110,000 people, the children and grandchildren that live in the communities.”
The Department of Toxic Substances Control said it would issue an order that outlines the safe closure of the plant along with cleanup of residential properties in neighboring areas.
“DTSC will use every tool and legal mechanism at its disposal to ensure that Exide’s remaining resources are used to properly close the facility and clean up contamination in the residential area," department Director Barbara Lee said in a statement.
State Sen. Ricardo Lara (D-Huntington Park), who wrote legislation requiring the state agency to issue Exide a permit or shut it down by the end of 2015, said the plant's closure will bring relief to those who live in the area.
"But the legacy of impacts of this facility will not go away overnight," he said in a statement. "To truly understand the magnitude of this issue, we need a comprehensive review of soil contamination and better data on the health impacts to people who continue to be exposed to unhealthy levels of lead and arsenic."
State Senate leader Kevin de Leon (D-Los Angeles) said that while the closure was a victory for those in the community who long wanted the facility shuttered, he was concerned about the terms of the agreement not to prosecute Exide.
"What concessions did the U.S. attorney get for letting them off the hook?" De Leon asked. "We need to make sure the community doesn't get shortchanged by this settlement."
Roberto Cabrales, a community organizer with Communities for a Better Environment, called news of the closure "a shocker."
His group and others fought for years to see the plant closed and had expected that state officials would allow Exide to remain open.
"We're concerned that they will not be pursued for criminal prosecution," Cabrales said. "But if that means that Exide will stay closed, then that's in itself a victory for the community."
He said community groups would push state regulators to quickly and thoroughly clean nearby homes contaminated with lead from the battery recycler.
Sitting in her small blue Honda car with her grandson outside of Maywood Elementary School, two miles from the Exide plant, Angela Benitez, 60, smiled at the news that the battery recycling plant was closing for good. She has lived in the area for nine years.
"It's magnificent," she said. "We've been signing petitions for it to close."
Benitez said she remembered the noxious fumes the facility emitted.
"It was almost like an acid smell, a bleach-like odor," she recalled.
The smell would cause her eyes to become inflamed. She'd get headaches and her grandson would often cough, she said.
She said she's disappointed Exide would not face criminal charges.
"I don't think the punishment fits the crime," Benitez said.
A 2013 report released by the South Coast Air Quality Management District found that Exide's arsenic emissions endangered the health of 110,000 people who live near the plant.
Over decades of operation, the facility has polluted the soil beneath it with high levels of lead, arsenic, cadmium and other toxic metals, according to state environmental records. It has also fouled groundwater, released battery acid onto roads and contaminated homes and yards in surrounding communities with lead emissions.
The agreement with federal officials is intended to allow Exide to continue operating as a viable company -- it also recycles batteries at facilities in Missouri and Indiana -- so that it can pay for cleanup of the Vernon facility and surrounding neighborhoods, according to the person involved with the negotiations. The Georgia-based company, one of the world's largest lead-acid battery recyclers and manufacturers, is in Chapter 11 bankruptcy and has filed plans to to emerge as a reorganized company. A hearing in the bankruptcy case is scheduled for March 27.
Exide's battery plants have left a similar legacy of pollution and health concerns across the country.
Since 2012, the company has closed or halted lead recycling operations in Pennsylvania and Texas in the face of pressure from regulators and surrounding residents.
The wide-ranging federal criminal investigation into the company -- first disclosed publicly in August -- involved its air emissions and transportation of hazardous waste. The U.S. Environmental Protection Agency and Department of Transportation were also involved in the investigation.
The Vernon plant, which can melt tens of thousands of car batteries a day to provide a source of lead for new batteries, has sat idle for the last year because it could not comply with air quality standards.
The facility had been allowed to operate for decades with only a temporary permit from the state Department of Toxic Substances Control.
The facility has operated in Vernon since 1922 and was taken over by Exide in 2000. The company has repeatedly been cited for violations of environmental regulations by state and local officials in recent years.
Following public outcry, Gov. Jerry Brown last year signed a law requiring regulators to either issue Exide a full permit by the end of 2015 or force the facility to close.
“Our long nightmare is over,” said Msgr. John Moretta of Resurrection Catholic Church in Boyle Heights, whose parishioners had raised health concerns about the facility and rallied for its closure for years. “We now look forward to a thorough and just cleanup of our homes and neighborhoods.”