LA Battery Recycling Plant Faces Legal Headaches After State Agency Suspends Operations

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A lead acid battery recycling plant just south of downtown Los Angeles is under growing legal pressure after regulators reported that it has spewed dangerous levels of arsenic into the air and is possibly contaminating groundwater.

The news has not only sparked securities class actions against the plant's owner, Georgia-based Exide Technologies, but an investigation by the Los Angeles city attorney. And after the state Department of Toxics Substances Control took the rare step of ordering Exide to suspend operations last week, it has raised questions over how well the agency is exercising its oversight.

For years, the plant has salvaged roughly 120,000 tons of lead per year from used vehicle batteries at its 24-acre plant in Vernon, a tiny industrial city near Boyle Heights and Maywood. In March, local air quality regulators said Exide was releasing alarming levels of arsenic into the air that posed an unacceptable cancer risk to 110,000 people nearby. The levels were higher than anything in the agency's experience and Exide was ordered to take immediate steps to cut emissions, said Sam Atwood, spokesman for the South Coast Air Quality Management District.

On the heels of that, the state Department of Toxics Substances Control, or DTSC, cited the plant for leaking water laced with lead, arsenic and cadmium out of the facility and ordered the plant to close until it fixes the problems.

Telling a company to shut down without taking it to court is highly unusual and could signal a shift in the state agency's enforcement strategy, said Kevin T. Haroff, an environmental attorney with Marten Law PLLC who has experience dealing with the DTSC.

"From their perspective it's a way to act very quickly," Haroff said. "I'm confident this is a test case to see how far they can push their administrative authority, and it's a response to the criticism that it's not been flexing its authority."

A major critic of the agency is Santa Monica-based nonprofit Consumer Watchdog, which released a report this year accusing the DTSC of lax oversight of hazardous waste and failure to protect public health. Liza Tucker, an advocate at Consumer Watchdog who authored the report, welcomed the state agency's decision to shut down Exide but asked: "Why did the DTSC let this go on for decades?"

"There's no excuse for it. They knew quite a lot about the problems at the facility; it wasn't news to them," Tucker said.

The Exide plant was the last site in the state to still be operating without a full DTSC-issued hazardous waste permit as required by the 1976 Resource Conservation and Recovery Act.

The agency has worked for the past two years to accelerate its review and cleanup at the site and it ordered the plant to close once it had the evidence it posed an unacceptable public health risk, according to a statement from DTSC Director Debbie Raphael when she announced the closure last week.

"With more than 30 million cars in California, we clearly need an effective method of recycling the millions of used automotive batteries that are generated each year," Raphael said. "Placing these batteries in a landfill wastes an important resource and can pose significant risks if not handled properly. But recyclers must also play by the rules."

Exide Technologies did not respond to several requests for comment. Los Angeles-based Sheppard, Mullin, Richter & Hampton LLP, which is representing Exide, also did not comment.

The pollution problems have spawned other legal headaches for the company – Los Angeles-based Glancy Binkow & Goldberg LLP filed a securities class action against Exide last month citing the pollution problems as well as the company's moves to restructure its debt. Loritz v. Exide Technologies, 13-CV-2607 (C.D. Cal., filed April 15, 2013). Other firms also have filed shareholder suits.

Attorneys at Glancy Binkow did not return calls seeking comment but in court filings accused Exide of hiding its liabilities from shareholders and that "after the above revelations seeped into the market the company's shares were hammered by massive sales sending them down approximately 46 percent, eviscerating more than $90 billion in market capitalization." The stock price has dropped further since then.

The Los Angeles city attorney's office is also looking into potential legal action against Exide at the request of Jose Huizar, a city councilman who represents parts of Los Angeles near the Exide plant.

City Attorney Carmen Trutanich said his office is investigating what legal remedies it can pursue, including possibly bringing claims under the state's toxics warning law, Proposition 65. That law requires businesses to notify the public if they could be exposed to unsafe levels of chemicals that cause cancer or reproductive harm.

"I want to make sure that Prop 65 is not our only remedy," he said, "because the danger to the public is not just Prop 65."

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