WASHINGTON – The U.S. government says it will ask a federal district court to hear its dispute with Toledo, Ohio-based auto parts maker Dana Corp. over $300 million in costs for the cleanup of six polluted sites.
The government on behalf of the Environmental Protection Agency and the Fish and Wildlife Service – said it will file a motion with the bankruptcy court to move the dispute to the district court because it “will necessarily entail substantial and material consideration of federal environmental laws which regulate organizations or activities affecting interstate commerce.”
A district court can take over litigation of a proceeding from a bankruptcy court if it requires both consideration of the Bankruptcy Code and activities affecting interstate commerce. The government said resolution of the dispute requires a “fact-intensive inquiry under federal environmental laws requiring no difficult issue of bankruptcy.”
The EPA and Fish and Wildlife Service have filed a total of $300 million in claims to clean up six sites associated with Dana over the course of more than 100 years. The bulk of the claims – $230 million – relate to a single site in South Plainfield, N.J., formerly operated by Cornell-Dubilier Electronics Inc.
Dana, however, said it believes the government’s claims are “substantially overstated and should be reduced, if not disallowed entirely.” The company, which has said it believes the government bears some responsibility to shoulder the cleanup costs in South Plainfield, is asking the bankruptcy court to determine how much it owes the government.
A hearing on Dana’s request – supported by the committees representing Dana’s unsecured creditors and noteholders – is scheduled for tomorrow in the U.S. Bankruptcy Court in Manhattan.
Dana said it can’t exit bankruptcy until it whittles down general unsecured claims to $3.25 billion. The company said it’s working “exceptionally hard” to meet that goal, but can’t do so without a court ruling on the government’s Superfund cleanup claims.
Dana has said it wants the government to cover at least part of the cost to clean up the South Plainfield site, arguing the Defense Department oversaw the factory during World War II, when much of the contamination occurred.