United States Announces Court Approval Of Historic $5.15 Billion Environmental And Tort Settlement With Anadarko Petroleum Corp.

Additional Payments for Individual Tort Victims

Largest Litigation Recovery for the Clean-Up of Environmental Contamination in Government’s History

Preet Bharara, the United States Attorney for the Southern District of New York, Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division (“ENRD”), and Cynthia Giles, Assistant Administrator of the U.S. Environmental Protection Agency, announced today that the United States District Court in Manhattan has approved the historic settlement of fraudulent conveyance claims brought by the United States and co-plaintiff Anadarko Litigation Trust (the “Trust”) against the Kerr-McGee Corporation and certain of its affiliates, including Andarko Petroleum Corporation, in the bankruptcy of Tronox Inc. and its subsidiaries (“Tronox”). Pursuant to the settlement agreement, the defendants must pay $5.15 billion, of which approximately $4.4 billion will be paid to fund environmental clean-up and for environmental claims, plus interest from April 3, 2014. This settlement will result in the largest payment for the clean-up of environmental contamination ever obtained in a lawsuit brought by the Department of Justice.

Manhattan U.S. Attorney Preet Bharara said: “Corporations may not pursue profit at the expense of public health. They may not hide from their responsibilities through corporate shell-games. And they may not rely on bankruptcy to push the cost of their misconduct onto the American taxpayer. This settlement will require the defendants to pay billions to make up for a legacy of environmental contamination and ruination left across the nation. ”

Acting Assistant Attorney General Sam Hirsch said: “The court’s approval of this settlement marks a significant victory for environmental justice by holding Kerr-McGee fully accountable for its attempts to defraud American taxpayers and escape a toxic legacy. Thanks to this settlement, billions of dollars will be made available to clean up contaminated sites across the United States.”

EPA Assistant Administrator Cynthia Giles said: “At EPA, we stand by the principle that if you make a mess, you clean it up. This decision means that soon more than $4 billion will be put to work in American communities, cleaning up water supplies and removing dangerous contamination.”

Settlement Approval

On April 3, 2014, the United States announced this settlement, which was then subject to a period of public comment and judicial approval. After receiving and considering comments from the public, the United States sought approval of the settlement agreement. On May 30, 2014, the United States Bankruptcy Court issued a decision recommending that the District Court approve the settlement. Now, the District Court has followed the Bankruptcy Court’s recommendation and approved the agreement.

In her decision, United States District Judge Katherine B. Forrest recognized that this case arises from a “series of transactions [by the Kerr-McGee Corporation] that resulted in the spin-off of Tronox, which Kerr-McGee left saddled with the massive environmental and tort liabilities it had accumulated over the course of decades of operating in the chemical, mining, and oil and gas industries, but without sufficient assets with which to address these liabilities.” For this reason, as the District Court explained, both the United States and the Tronox estate (now represented by the Trust) brought fraudulent conveyance claims against the defendants, which the settlement resolves.

In approving the settlement, the District Court concluded:

• “The settlement is historic” and provides the “largest [clean-up] recovery in American history.”
• “The Settlement Agreement promotes federal environmental law’s objectives of ‘encourag[ing] prompt and effective responses to hazardous waste releases,’ ‘impos[ing] liability on responsible parties,’ and ‘reduc[ing] the inefficient expenditure of public funds on lengthy litigation.’”
• The settlement is a “fair and reasonable” consent decree resolving the Government’s claims against the defendants.

The District Court issued its opinion on Monday, November 10, 2014.

The District Court’s approval is subject to appeal. If no timely appeal (or other further review specified in the settlement agreement) is filed, the settlement will go into effect. Two days later, the defendants’ payment will be due.

Mr. Bharara again thanked the many federal, state, and tribal officials who worked tirelessly on this matter, as well as the Trust, its trustee, and its counsel, for their critical work on this case.

This case was handled by the Environmental Protection Unit and the Tax and Bankruptcy Unit of SDNY’s Civil Division. Assistant U.S. Attorney Robert William Yalen is in charge of the case, which he handled along with Assistant U.S. Attorney Joseph Pantoja and Alan S. Tenenbaum, Katherine Kane, Frederick S. Phillips, Marcello Mollo, and Erica Pencak of ENRD.

Tronox Approval