United States Announces Global Environmental Bankruptcy Settlement with Tronox
Chemical Company Agrees to Pay $270 Million and 88 Percent of Proceeds from Fraudulent Conveyance Lawsuit to Settle Environmental Liabilities
WASHINGTON – Under a global bankruptcy settlement lodged in federal bankruptcy court in Manhattan today, Tronox Inc. and its affiliated debtors will pay $270 million into trusts and to federal and state agencies that will fund the cleanup of contaminated sites in 22 states, numerous federal agencies announced today.
Officials from the Department of Justice, the U.S. Attorney’s Office for the Southern District of New York, the Environmental Protection Agency, the U.S. Forest Service, the Department of Agriculture, the National Oceanic and Atmospheric Administration (NOAA), the Department of Commerce, Department of the Interior (DOI) and the Nuclear Regulatory Commission (NRC) announced that the United States, 22 states, the Navajo Nation, and local governments in Chicago and West Chicago, Ill., have entered into a consent decree and settlement agreement with Tronox Inc., a chemical company and its 14 affiliated debtors, to settle certain environmental liabilities under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) also known as the "Superfund", the Resource Conservation and Recovery Act (RCRA), and other state, local, and tribal environmental laws.
The settlement agreement, filed today in Manhattan bankruptcy court, will create five environmental response trusts to take title to contaminated properties currently owned by Tronox. Tronox will pay the governments and the trusts $270 million for future cleanup and administration at these and other sites contaminated by Tronox and its predecessor companies, and in compensation for moneys previously expended by the governments and penalties for which Tronox is liable.
Additionally, Tronox will transfer to the governments and trusts an 88 percent share of Tronox’s interest in a pending lawsuit against the company’s former parent company Kerr-McGee Corporation, and its parent company Anadarko Petroleum Corporation. This lawsuit alleges that these defendants fraudulently transferred valuable assets out of Tronox, leaving Tronox with insufficient funds to pay the billions of dollars of environmental liabilities that Tronox owed to the governments. The United States has intervened in the lawsuit. Tronox will also create and fund with a portion of the $270 million, a litigation trust to conduct the lawsuit after the effective date of Tronox’s plan of reorganization.
The five environmental response trusts are:
- A multistate trust will take custody of more than 25 contaminated properties in 14 states and will perform or fund cleanup at more than 1,800 potentially contaminated former service station properties around the country.
- The Henderson Trust will take custody of real property owned by Tronox in Henderson, Nev., on which Tronox’s electrolytic chemical facility is situated.
- The Cimarron Trust will take custody of Tronox’s former nuclear fuel processing facility in Cimarron, Okla.
- The Savannah Trust will take custody of Tronox’s former titanium dioxide facility and active sulfuric acid plant, in Savannah, Ga.
- The West Chicago Trust will take custody of Tronox’s thorium-contaminated Rare Earths Facility in West Chicago and will also perform clean up work at related vicinity properties. A portion of the proceeds and of Tronox’s interest in the pending lawsuit will go directly to the governments for civil penalties and natural resource damages, as well as past and future cleanup costs at sites not owned by Tronox.
Tronox filed bankruptcy in January 2009 in U.S. Bankruptcy Court for the Southern District of New York. In August 2009, the United States filed claims against Tronox in the bankruptcy seeking to recover past and future environmental cleanup costs, decommissioning costs, and natural resource damages for sites presently or formerly owned or operated by Tronox. The United States also sought civil monetary penalties for violations of CERCLA, RCRA, the Clean Air Act and the Clean Water Act. The claims of the United States were brought on behalf of the EPA, the Forest Service, the NRC, the Fish and Wildlife Service of DOI, and NOAA. The Settlement also resolves claims of the Bureau of Land Management of DOI, and a contribution claim brought on behalf of the U.S. Department of Defense.
Before being considered by the bankruptcy court for approval under applicable environmental laws, the Settlement Agreement will be lodged with the bankruptcy court for a period of 30 days to provide public notice and to afford members of the public the opportunity to comment on the settlement.
The United States, the Navajo Nation, the states and the local governmental entities worked closely and engaged in extensive negotiations to ensure that the settlement agreement reflected the needs of the contaminated sites and provided a fair resolution of Tronox’s environmental liabilities to the governments.
Southern District of New York Assistant U.S. Attorneys Robert William Yalen, Tomoko Onozawa and Joseph Pantoja, along with Alan S. Tenenbaum, Frederick S. Phillips, Katherine Kane, Marcello Mollo, and Erica Pencak of the Environment and Natural Resources Division of the Department of Justice, are handling the case.
For more information on clean-ups, visit the EPA website: www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html.