Compliance

Manufacturing Plant Notices of Violation

Ford received 14 notices of violation (NOV) from government agencies in 2008. Twelve of the NOVs received were in the United States, one was in Brazil and one was in the Philippines. Four of these NOVs were related to the Sterling issue described below. The issuance of an NOV is an allegation of noncompliance with anything from a minor paperwork requirement to a permit limit, and does not necessarily mean that the Company was in noncompliance or received a penalty.

The Michigan Department of Environmental Quality (MDEQ) issued four Letters of Violation to the Sterling Axle Plant between April 17, 2008, and October 7, 2008, and has commenced a civil administrative enforcement proceeding against the Company. The Letters of Violation arise from the plant's disclosure of several potential violations of its air permits. We are working with the MDEQ to resolve the enforcement proceeding, and the plant has taken steps to correct and prevent recurrence of the potential violations.

Offsite Spills

In 2008, offsite spills occurred at eight Ford manufacturing facilities in the United States. All required reporting and cleanup was completed in a timely fashion.

Fines and Penalties Paid

In 2008, Ford paid approximately $2 million in fines or penalties globally pertaining to environmental matters in our facilities. The vast majority of this was paid in an administrative settlement with the Ohio Environmental Protection Agency (Ohio EPA) pertaining to the Cleveland Casting Plant. The U.S. Environmental Protection Agency had issued "Maximum Available Control Technology" regulations for foundries; these rules imposed more stringent air emission limitations on the iron melting operations at the Cleveland Casting Plant. To comply with the regulations required a significant investment to design and install new plant equipment and systems by April of 2008. Changing market conditions resulted in a decision to idle the Cleveland Casting Plant in 2010. This meant that Ford would be unable to recover the substantial costs associated with the new equipment and systems; the installation of such systems only makes sense if they are expected to be in operation for many years. Ford initiated negotiations with the Ohio EPA to allow the plant to continue operating without installing the additional equipment. An acceptable settlement was reached that allows the Cleveland Casting Plant to continue to operate through 2010.