Anadarko Petroleum Corp. has agreed to pay a record settlement of more than $5 billion to resolve environmental claims against subsidiary Kerr-McGee Corp., the company and U.S. Department of Justice announced Thursday.
Oklahoma City-based Kerr-McGee created Tronox Ltd. in a 2005 spinoff that a federal bankruptcy judge ruled last year left the chemical manufacturer with billions of dollars worth of environmental liabilities. Kerr-McGee was acquired by Anadarko a year after the spinoff in a deal worth more than $18 billion.
The judge in December ruled Kerr-McGee had fraudulently conveyed assets to Tronox to evade its debts, as argued by the federal government when it intervened in Tronox’s 2009 bankruptcy case. Parent company Anadarko could have faced a judgment worth up to $14 billion.
The settlement is the largest environmental enforcement recovery ever by the Justice Department. It still must be approved by a judge.
“Kerr-McGee's businesses all over this country left significant, lasting environmental damage in their wake,” Deputy Attorney General James Cole said. “It tried to shed its responsibility for this environmental damage and stick the United States taxpayers with the huge cleanup bill.”
U.S. Attorney Preet Bharara said Kerr-McGree tried to play a “corporate shell game” to play up the value of its oil and natural gas business at the expense of its environmental liabilities.
“If you are responsible for 85 years of poisoning the earth, then you are responsible for cleaning it up,” Bharara said.
Anadarko CEO Al Walker said the settlement frees the Houston-based company to focus on developing its asset base.
The company’s stock rose nearly 15 percent Thursday, closing at $99.02 a share.
“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,” Walker said.
Nearly 90 percent of the money from the settlement will go to trusts and other governmental entities to remediate polluted sites.
The remaining 12 percent will be distributed to a tort trust to compensate individuals injured as a result of Kerr-McGee's environmental failures.