WASHINGTON -- The Department of Justice and the Environmental Protection Agency announced on Thursday a $5.15 billion settlement with a subsidiary of Anadarko Petroleum in what is, according to the two agencies, the largest pollution cleanup settlement in history.
The settlement stems from pollution left behind by the Kerr-McGee Corporation, which was acquired by Anadarko in 2006. Kerr-McGee's decades-long legacy of polluting industries dates back to at least 1928, and included uranium mines, wood treatment facilities and chemical manufacturing plants.
The DOJ claimed that between 2002 and 2005, Kerr-McGee transferred the more profitable oil and gas portions of its company to a new entity, referred to in the case as "New Kerr-McGee." In 2006, it transferred other parts of its company associated with the years of pollution into a separate company, Tronox, which was left insolvent. Tronox couldn't pay the costs of the environmental cleanup and went into bankruptcy in 2009.
The government argued that Kerr-McGee devised this scheme to evade responsibility for cleanup and instead passed the cleanup costs on to local communities and the federal Superfund program.
A court last December found Kerr-McGee guilty of fraudulent conveyance. The court also held the new company and its parent, Anadarko, liable for the cleanup costs.
"Kerr-McGee sought simply to walk away from it all through a corporate shell game," said U.S. Attorney for the Southern District of New York Preet Bharara in a press conference on Thursday. The company, said Bharara, "polluted indiscriminately and left others holding the toxic tab."
"If you are responsible for 85 years of poisoning the earth, you are responsible for cleaning it up," he said.
"This settlement agreement with the Litigation Trust and the U.S. Government eliminates the uncertainty this dispute has created, and the proceeds will fund the remediation and cleanup of the legacy environmental liabilities and tort claims," said Anadarko chairman, president and CEO Al Walker in a statement.
The polluted Kerr-McGee sites include a former manufacturing facility in Henderson, Nev., where hexavalent chromium and perchlorate were produced. Pollution from that site has contaminated Lake Mead, which flows into the Colorado River and is a major source of drinking water for the Southwest. Of the settlement, $1.1 billion will be used for cleanup costs at that site.
The settlement also covers 50 abandoned uranium mine sites in and around the Navajo Nation in Arizona and New Mexico. The EPA will get $985 million to cover cleanup costs for those sites. Another $1.1 billion will be used to cover cleanup costs at the Kerr-McGee Superfund Site in Columbus, Miss., where the company manufactured chemicals from 1928 to 2003. And $217 million of the settlement is slated to be used for cleanup costs at a former Kerr-McGee wood treatment facility in Manville, N.J.
The bankruptcy court had said in December that the government could seek as much $14.1 billion from Kerr-McGee. The settlement announced Thursday, while still the biggest of its kind, is at the low end of what the court had allowed for.
Deputy Attorney General James M. Cole said at Thursday's press conference that the DOJ believes the $5.15 billion settlement "will be enough to cover it."
"I think this case stands for a principle that is really important to us, which is that the polluter pays," said Cynthia Giles, the EPA's assistant administrator for the Office of Enforcement and Compliance Assurance. "When you make a mess, you've got to clean it up."