Largest ever toxic waste settlement will help communities around the country
By Summit Voice
Under a settlement agreement with the EPA and the U.S. Department of Justice, Anadarko will pay $5.15 billion to a litigation trust. According to the EPA, the settlement is the largest recovery for the cleanup of environmental contamination in history.
The award came after a bankruptcy court in New York found that Kerr-McGee and the Anadarko subsidiaries played a shell game, selling off assets to try and evade their liabilities for cleanups at toxic sites around the country.
The trust’s environmental and tort beneficiaries will receive about $4.475 billion and $605 million, respectively, and nearly $2 billion will be paid for cleanup work associated with numerous EPA-lead sites, resulting in the largest bankruptcy-related award that EPA has ever received for environmental claims and liabilities.
With more than 2,700 sites in 47 states at issue in the case, the settlement addresses Kerr-McGee’s enormous legacy environmental and tort liabilities, including their liability at federal Superfund sites in Manville, N.J., Jacksonville, Fla., Columbus, Miss., Navassa, N.C., West Chicago, Ill., Milwaukee, Wisc., and Soda Springs, Idaho. The settlement also covers approximately 50 former uranium mines in and near the Navajo Nation territory in the southwestern United States.
“EPA’s vigorous pursuit of this case will have a big return for communities across the country. Companies that pollute can’t escape their responsibility to pay for the cleanup. EPA will continue to fight for those affected by pollution.”
Kerr-McGee, founded in 1929, has long been doing the dirty work for American industry, with wood-treating, uranium mining and processing, thorium processing, and ammonium perchlorate manufacturing. By the early 2000s, Kerr-McGee had discontinued most of these historic business operations yet remained responsible for massive legacy environmental and tort liabilities related to those businesses. At that time, Kerr-McGee operated two core businesses: oil and gas exploration and production; and chemical production.
In 2001, Kerr-McGee concluded that its enormous legacy liabilities were a drag on its “crown jewel” oil and gas business and embarked on a plan to separate its valuable oil and gas assets from these legacy liabilities. In particular, between 2002 and 2005, Kerr-McGee transferred these oil and gas assets to a “new” Kerr-McGee (one of the defendants), and then spun off the carcass (a small, cyclical chemical business with 85-odd years of legacy liabilities, which was re-named Tronox) in 2006.
A few months later, Anadarko acquired Kerr-McGee (and the oil and gas business) for $18 billion. Meanwhile, as a result of the transactions, Tronox was rendered insolvent and unable to pay for its legacy liabilities, and ultimately filed for bankruptcy in 2009.
Under the settlement, the litigation trust and defendants provide mutual releases in exchange for a $5.15 billion payment from the defendants. Among other things, the settlement also provides covenants not to sue from the U.S. to the defendants under certain environmental statutes regarding the sites at issue in the litigation. The U.S. reserves the right to pursue the defendants for matters not addressed by the proposed settlement, such as any liability that the defendants may have regarding their oil and gas business, including any liability in connection with the Deepwater Horizon oil spill litigation.
The settlement proceeds described below will fund investigations and cleanup work at the vast portfolio of sites at which Kerr-McGee (and later Tronox) were liable. In particular, the environmental proceeds will be distributed to governments and environmental response trusts, primarily for future cleanup costs at sites covered by the settlement, but also to reimburse the governments for cleanup costs previously incurred at the sites. In addition, such proceeds will enable the governments and environmental response trusts to clean up contaminated Environmental Justice communities in and around the Navajo Nation, West Chicago, Ill., Jacksonville, Fla., and Navassa, N.C.