In prep for the September edition of our Insider e-newsletter, I spent some time yesterday researching the recent bankruptcies and government-orchestrated restructuring of GM and Chrysler. Some critics are absolutely incensed that the restructuring allows the companies to just walk away from millions of dollars of environmental liability that accumulated over decades of auto manufacturing. My research raised more questions than answers in my mind. Here's what I found out:

1. Fellow commonground blogger Sean "Where's the Food" Dundon and I have both blogged on the thousands of dealerships that these firms put on the selling block (lots of Main-on-Main locations that may need some cleanup, but are in great retail locations that should appeal to investors) but...
2. The stickier issue is the other properties owned by GM and Chrysler than now need to be sold.
3. The new GM emerged from its restructuring in July, leaving 127 unwanted properties under the control of Motors Liquidation (the "old GM"), which has $1.2 billion to wind down operations and sell them to pay off creditors.
4. The sale of these properties, with environmental liabilities estimated at $530 million, will not be easy, especially in today's difficult commercial real estate market. They include 15 factories, as well as vacant land, homes, landfills, a golf course and a church.
5. Sale of the former factory sites will be particularly difficult given their sheer size (100s of acres) and environmental cleanup costs that could be prohibitively expensive.
6. Chrysler also left behind environmental problems with its old company, but the magnitude of its real estate assets does not reach the scale of GM's.
7. One 270-acre site in Massena, NY, possibly the worst polluted site left behind by GM, reportedly received thousands of tons of PCB-contaminated sludge from the dumping of hydraulic oil. The site also housed an open dump as well as millions of gallons of open waste lagoons, and its cleanup carries a $225 million price tag.
8. Environmental contamination has already stalled the sale of a former GM factory in Flint, MI (see picture below) due to uncertainties about future environmental liability.
9. Many of the large manufacturing sites with the worst contamination are in areas desperate for new economic development, tax revenue and jobs.
10. Motors Liquidation is currently in discussions with government officials about the potential to reach indemnification agreements. Those have to be some pretty difficult discussions. In response to the difficulties it's encountering selling off the Buick City site, Motors Liquidation issued a statement saying:

"We believe that the amounts allocated should be adequate to fund remediation at these sites, based in part upon estimated from nationally recognized environmental management firms we have engaged to assist us in estimating what is required. We look forward to working with key stakeholders...to arrive at mutually agreeable solutions that will expedite the remediations."

Obviously companies have gone bankrupt before, leaving behind expensive messues, but the size of environmental liabilities shed by GM is huge. Lehman last year was also a huge liquidation but as one expert said, "that company wasn't sitting on decade of auto manufacturing contamination."

These are the questions (in no particular order) that popped up during my research:

• Ultimately, who will bear the cost of cleaning up these sites? (I think it's us, the taxpayers)
• If GM and Chrysler become profitable again, will they have to re-assume environmental liability at these sites? (my guess is no)
• Who will shoulder the long-term liability for any environmental problems that surface years down the road? Motors Liquidation isn't going to be around years from now.
• Should the buyers assume liability? If so, then what incentive do they possibly have to buy these sites, especially in today's market? My guess is some foreign auto makers will buy at least some of the plants for US-based operations but what about the others?
• Will the government impose liens on these sites that could inhibit developers from buying the land? or offer guarantees/indemnities?
• If the government does not provide adequate incentives for buyers to purchase these sites, will they just sit idly by behind chain link fences with warnings posted on them?  
• Is the silver lining of all of this that forces have converged to force these contaminated sites, many of which were mothballed liabilities, back into productive reuse, spurring demand for assessments, sampling and cleanup? Not to mention tax revenues and jobs at a time when both are sorely needed?

Anyone care to weigh in? Any past experience that's could portend where this is all headed?