US Attorney – Dana Corporation Agrees To Pay $125 Million To Settle Toxic Waste Site Environmental Liability

MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, RONALD J. TENPAS, the Assistant
Attorney General for the Justice Department’s Environment and
Natural Resources Division, ALAN J. STEINBERG, the Regional
Administrator of Region 2 of the Environmental Protection Agency
(“EPA”), JOHN H. DUNNIGAN, the Assistant Administrator of the
National Ocean Service of the National Oceanic and Atmospheric
Administration (“NOAA”) of the Department of Commerce, and MARVIN
MORIARTY, the Northeast Regional Director of the Fish and
Wildlife Service of the Department of the Interior, announced
today that the United States has settled environmental claims of
the EPA, the Department of Commerce, and the Department of the
Interior (the “Government”), brought against chapter 11 debtors
DANA CORPORATION and 40 affiliated companies (“DANA”), under the
Comprehensive Environmental Response, Compensation and Liability
Act (“CERCLA”). Pursuant to a Stipulation and Order, filed in
Manhattan federal court, the United States’ environmental claims
will be allowed in the bankruptcy proceeding in the amount of
$125,670,252. An allowed claim is an uncontested claim that DANA
is required to pay under its court-approved plan of
reorganization, the terms of which govern creditor recoveries.
DANA had filed an objection to the United States’ environmental
claims, which DANA will withdraw in connection with the
settlement. The settlement resolves the Government’s
environmental cleanup claims with respect to six toxic waste
sites, also known as Superfund sites, in five states. The
settlement also resolves claims against DANA for related civil
monetary penalties.

In May 2006, DANA, an auto parts manufacturer based in
Toledo, Ohio, filed petitions under chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the Southern
District of New York. The Government then filed claims against
DANA in the Bankruptcy Court seeking to recover past and future
environmental cleanup costs with respect to six Superfund sites
formerly owned or operated by DANA, and/or where DANA had
disposed of hazardous waste. The Government also filed a claim
against DANA for natural resource damages at one of these sites.
The Government’s claims also sought civil monetary penalties
under CERCLA and the Clean Water Act for violations at two
manufacturing facilities formerly owned by DANA.
Because the case presented significant issues of
federal environmental law, on November 20, 2007, United States
District Judge SHIRA A. SCHEINDLIN granted the Government’s
motion to withdraw the Government’s claims from the Bankruptcy
Court, and assumed jurisdiction over all proceedings relating to
the Government’s claims.

The largest of the Government’s environmental claims
relates to the Cornell Dubilier Electronics, Inc. (“CDE”)
Superfund Site, located in South Plainfield, New Jersey (the “CDE
Site”). The CDE Site consists of a 26-acre industrial facility
and the surrounding area that has been contaminated as a result
of releases of hazardous substances from the facility. The
Government charged that DANA was liable at the CDE Site based on
its prior ownership of the real property and buildings at the CDE
Site from 1936 to 1956. According to the Government’s Proof of
Claim, during that time, DANA leased the property and buildings
to CDE, an electronics manufacturer whose operations polluted the
property. Specifically, the Government charged that, as a result
of CDE’s burying of hazardous waste in large pits on the
property, and pollution released from CDE’s manufacturing
operations, the property and surrounding environment has been
pervasively contaminated with polychlorinated biphenyls (“PCBs”)
and other toxic substances. In addition, the Government alleged
that PCB contamination from CDE’s operations during DANA’s
ownership caused injury to natural resources at the CDE Site,
such as migratory birds and fish. DANA has denied these
allegations. For a number of years, EPA has been working to
address the contamination at the CDE Site and the risk posed to
the surrounding community.

Under the settlement for the CDE Site, the United
States’ claim in the bankruptcy proceeding will be allowed in the
amount of $100,710,000. Of that total, $97,590,000 will be
allocated to EPA to cover past and future cleanup costs at the
CDE Site. The remaining $3,120,000 will be allocated to the
Departments of Commerce and Interior for natural resource
restoration and assessment.

DANA also agreed that the United States would receive
an allowed claim in the bankruptcy totaling $24,290,000 in
settlement of EPA’s environmental claims relating to a Superfund
site in Hastings, Nebraska (the “Hastings Site”). DANA owned and
operated an auto parts manufacturing facility at the Hastings
Site from approximately 1978 to 2002. The Government alleged
that DANA used hazardous substances, such as tetrachloroethylene,
in its manufacturing processes and that these hazardous
substances were released into the environment during plant
operations. DANA also denies these allegations.

In addition, DANA agreed that the United States would
receive an allowed claim in the bankruptcy totaling approximately
$500,000 for response costs relating to four other Superfund
sites located in Southington Connecticut; Claypool and Elkhart,
Indiana; and Tremont City, Ohio. DANA further agreed that the
United States would receive an allowed claim in the amount of
$169,000 to resolve violations of CERCLA and the Clean Water Act
at two facilities formerly owned by DANA in Muskegon, Michigan,
and Bellefontaine, Ohio.

Pursuant to federal regulations, the Stipulation and
Order will be lodged with the Court for a period of not less than
thirty days to provide public notice and to afford members of the
public the opportunity to comment on the settlement.
“This settlement will provide vital funds necessary to
remediate pollution at six toxic waste sites in multiple states,”
said United States Attorney MICHAEL J. GARCIA. “This is a
constructive solution that will help clean up contamination and
make these communities safer.”

“Today’s settlement will provide the government with
funds to pay for past costs, future cleanup, and restoration
projects to help remedy the contamination at Dana Corporation
sites around the country,” said Assistant Attorney General RONALD
J. TENPAS. “This settlement is a result of cooperation among
several federal agencies and offices and ultimately will result
in a cleaner environment.”

“EPA’s pursuit of its costs, despite DANA’s bankruptcy,
demonstrates EPA’s commitment to the Superfund principle that the
polluter pays,” said EPA Regional Administrator ALAN J.
STEINBERG. “This settlement is positive for the community of
South Plainfield, New Jersey, and EPA will continue to make
strides in the cleanup of the CDE Site.”

“This settlement is consistent with NOAA’s core mission
to protect and restore coastal and marine resources threatened or
injured by oil spills, releases of hazardous substances, and
vessel groundings,” said NOAA Assistant Administrator JOHN H.
DUNNIGAN. “Early resolution of natural resource liability with
the Dana Corporation will help restore fish habitat and enhance
recreational fishing opportunities in the Raritan River
watershed. By avoiding costly and time consuming litigation,
everyone wins — industry, the natural resources, and the
public.”

Mr. GARCIA praised the investigative efforts and
assistance provided in the case by EPA, the Departments of
Commerce and Interior, and the Environment and Natural Resources
Division of the Department of Justice.
Assistant United States Attorneys PIERRE G. ARMAND,
MATTHEW L. SCHWARTZ, DANIEL P. FILOR and JOHN D. CLOPPER are in
charge of the case.
08-147 ###

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