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Judge OKs $5B Settlement in Kerr-McGee Pollution Case

By Daniel Taylor, Esq. on November 12, 2014 | Last updated on March 21, 2019

A federal judge has approved a settlement agreement in which Anadarko Petroleum Corp will reportedly pay $5.15 billion to clean up pollution at nearly 2,000 sites across the country.

The United States Department of Justice is calling the settlement the largest-ever recovery for environmental cleanup, reports Reuters. The settlement resolves a lawsuit brought by creditors of Tronox, a spin-off of energy company Kerr-McGee, against Anadarko, which acquired Kerr-McGee in 2006.

What led to this record-setting environmental cleanup settlement?

Tronox Bankruptcy

Tronox is a chemical company that was formerly a unit of Kerr-McGee before being spun off from the parent company in 2005. The company filed for bankruptcy in 2009.

Tronox, and federal prosecutors, alleged that Kerr-McGee spun off Tronox to rid itself of liability for the polluted sites before being acquired by Anadarko in 2006. Creditors of Tronox in the company's 2009 bankruptcy -- joined by the U.S. Justice Department -- alleged that the company's spin-off was a fraudulent transfer. A federal bankruptcy judge agreed, finding Anadarko liable for between $5.2 billion and $14.2 billion last year, reports The Wall Street Journal. As a result of the settlement, the creditors, companies, and government have agreed to release claims against one another.

Settlement Terms

Under the terms of the settlement, around $4.5 billion will go towards cleaning up polluted sites across the country. The rest will go to pay for legal claims filed by those sickened from exposure to the pollution.

Among the cleanup sites funded by the settlement is a former uranium mine in territory belonging to the Navajo Nation. Nearly $1 billion of the settlement money will go to clean up this site, reports The Wall Street Journal, while an additional $1 billion will go to clean up former chemical manufacturing operations in Nevada that had polluted Lake Mead.

Now that the settlement has been approved, money may start being disbursed within weeks.

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