Questions remain after Exide deal with federal prosecutors

Some wonder if Exide will meet its cleanup obligations after reaching a deal to avoid criminal charges

Over the last year, federal authorities built what appeared to be a strong criminal case against Exide Technologies, the Vernon battery recycler that has long faced scrutiny for spewing lead and arsenic into neighborhoods in southeast Los Angeles County.

Investigators found environmental crimes spanning two decades and documented the transgressions in hundreds of pages. Among other violations, the company and previous operators had illegally stored lead and caustic battery acid at the 15-acre facility and then dripped hazardous waste all over Southern California roads as they transported it in leaking trailers to an unpermitted facility in Bakersfield.

But instead of charging Georgia-based Exide with crimes that could have landed its executives in jail, the U.S. attorney's office struck a deal. It allowed the company—and firm employees—to escape criminal charges by agreeing to permanently close the Vernon facility, demolish it and clean up the pollution. Exide also had to commit to pay nearly $50 million to clean up the site and surrounding communities while admitting to an array of felony violations.

The U.S. attorney's office defended the strategy as a way to ensure a timely cleanup without leaving taxpayers saddled with the bill. But some state officials and community groups say that after watching decades of lackluster environmental enforcement by California regulators, they have serious doubts about whether the agreement will ensure that Exide doesn't walk away from its mess before it's fully cleaned up.

DOCUMENTS: Exide non-prosecution agreement

Joseph Johns, assistant U.S. attorney and chief of environmental crimes, said he believes there are safeguards in place to ensure Exide finishes the cleanup work. "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," he said at a news conference.

The Exide plant, about five miles southeast of downtown Los Angeles, has been a source of community frustration for years. The concerns were heightened after a March 2013 report to the South Coast Air Quality Management District found its arsenic emissions posed an increased cancer risk to 110,000 people who live nearby. The plant sat idle for the last year because it could not comply with air quality rules. Federal officials were worried that Exide, which is in the middle of bankruptcy proceedings, was preparing to resume operations in a matter of weeks.

The terms of Exide's plans to emerge from Chapter 11 bankruptcy, which a court could confirm by the end of March, would have almost certainly been liquidated if it still faced the threat of criminal prosecution, federal officials said. That would leave no one but the taxpayers to fund cleanup of the site and homes in Maywood and Boyle Heights that had been contaminated by decades of lead emissions.

Community groups in southeast Los Angeles County that have long worried about the health effects of the facility and demanded action against the plant reacted to the deal between federal officials and Exide with a mix of surprise, relief and skepticism.

"We're concerned that they will not be pursued for criminal prosecution," Roberto Cabrales, a community organizer with Communities for a Better Environment, 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.

State Senate leader Kevin de León (D-Los Angeles) said that while the closure was a victory for those in the community who have 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 León asked. "We need to make sure the community doesn't get shortchanged by this settlement."

Federal officials said the agreement requires the company to pay the cost of the entire cleanup, even if it exceeds $50 million.

That's because the deal contains a "hammer," they said: If the company does not comply with federal and state agreements at any point in the next 10 years, it will be prosecuted for the felonies to which it has now admitted.

Federal officials' agreement with Exide does not require funds beyond the $50 million the company previously promised to set aside under a 2014 settlement with state regulators to pay for closure and cleanup of the facility and to clean lead-tainted soil from surrounding homes.

But under a related closure agreement with Exide state regulators announced Thursday, some of those payments will be accelerated. The company will also be required to pay an additional $5 million to clean homes in 2018.

The state Department of Toxic Substances Control will oversee a years-long cleanup of the property, which will remain under the ownership of Exide Technologies, and nearby homes.

Over the next two years, Exide will be required to remove all buildings and structures, reducing the site to dirt. After that, studies will start "to better characterize the full extent of the contamination on the site," DTSC Director Barbara Lee said in a conference call with reporters. Further remediation will follow, she said.

"We will make sure they get the job done," Lee said.

Lee acknowledged Thursday that cleaning up the facility and surrounding neighborhoods is likely to exceed $50 million. She said the department has collected about $16 million of that so far.

Lee said she told Exide on Feb. 26 that the department would not issue a full permit for the facility, prompting weeks of discussions with the company about the terms of its closure.

Under a new state law adopted in the wake of the outcry over the pollution, lawmakers had required the DTSC to either issue a permit or force Exide to close the facility by year's end.

The Department of Toxic Substances Control had allowed the facility to operate for decades without a full permit, even as it racked up dozens of hazardous waste violations.

The hundreds of pages of documents released by federal officials Thursday provided a snapshot of extensive contamination and hazardous waste violations at the facility since at least 1985.

They detail how acid, lead and other metals fouled groundwater around an earthen acid dump pit; how hazardous waste was released from dozens of work stations at the facility; and how pollution migrated from the plant through the soil, air, surface and ground water, resulting in high lead levels in surrounding soil.

The criminal investigation, disclosed publicly in August, also included investigators from the U.S. Environmental Protection Agency and Department of Transportation.

The facility, which employed about 130 workers, began operations in 1922 and was taken over by Exide in 2000. The company has been in chapter 11 bankruptcy since June 2013.

In a statement, Exide said the agreements with federal and state officials will allow the company to proceed with its plan to emerge from bankruptcy.

"Exide expects to be able to meet its closure and cleanup obligations under these agreements, continue to honor its environmental obligations at its other facilities, and preserve nearly 10,000 jobs globally," the company's statement said.

The deal also extends an ongoing program to test the blood of surrounding residents for lead, a potent neurotoxin, for which there is no safe level of exposure. The metal, one of the oldest-known toxic substances, can cause learning disabilities and other developmental problems in children.

Of 118 homes in areas of Boyle Heights and Maywood tested so far, all but three had lead concentrations high enough to require soil removal, according to data from the state toxic substances department. About three dozen of those homes have been cleaned up. The residential property cleanup could be expanded if testing currently underway shows elevated levels further away from the facility, state officials said.

At Indiana Street and Union Pacific Avenue in Boyle Heights on Thursday, workers in orange and green neon vests could be seen replacing lead-contaminated soil. Two large sacks of dirt sat on the front lawn of one of the homes.

At another home nearby, workers used an excavator to lay new dirt.

Not far away, Miguel Dominguez, 50, a 10-year resident of the neighborhood stood in front of his new lawn and said his 3-year-old son is staying mostly with his grandmother since workers began replacing some of the contaminated soil.

"I'm happy that they're closing the plant," he said in Spanish, "but in reality, it's not just the plant who should be held accountable, but those who let them operate for so long."

tony.barboza@latimes.com

Twitter: @tonybarboza

Times staff writers Julie Cart and Ruben Vives contributed to this report.

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