HOUSTON — A giant Texas oil company, Anadarko Petroleum, has agreed to pay $5.1 billion for a vast environmental cleanup, a sum the Justice Department said was the largest it had ever won in such a case.
The settlement, announced on Thursday, is aimed at restoring thousands of sites polluted by toxins and compensating thousands of people with personal injury claims.
The case stretches back almost a decade, originating with claims against Kerr-McGee, an Oklahoma energy and chemical company that is now a subsidiary of Anadarko, one of the country’s most successful oil and gas producers.
Anadarko had argued that it could not be held liable for pollution caused by Kerr-McGee, which had ostensibly passed the liabilities on to a spinoff company called Tronox, which later declared bankruptcy.
But a bankruptcy judge said the reorganization was simply an attempt to dodge liability. In announcing the settlement, the deputy attorney general, James M. Cole, said it reflected “the Justice Department’s firm commitment to preventing and combating all forms of fraud and to securing environmental justice.”
But oil experts said it was also a welcome development for Anadarko, removing a long distraction and possibly making the company — with interests from West Texas to West Africa and Algeria — a takeover target for a suitor looking to acquire new reserves.
Anadarko’s chief executive, Al Walker, issued a statement hailing the agreement, saying it “eliminates the uncertainty this dispute has created.”
Anadarko shares soared on news of the settlement, closing up 14.5 percent, in part because the sum was far lower than what the government originally sought.
“It removes a huge cloud hanging over the stock,” said Fadel Gheit, a senior oil analyst at Oppenheimer & Company. He called Anadarko “the most attractive takeover target because it has a premier position on the onshore U.S. and is one of the biggest leaseholders and operators in the Gulf of Mexico.”
Kerr-McGee gained notoriety in the 1970s when Karen Silkwood, a labor activist, claimed that the company was poisoning her with radioactive matter at its nuclear materials plant outside Crescent, Okla.
The latest chapter in its saga dates back at least to 2005, when the company spun off its chemical business as Tronox and transferred environmental liabilities to it. Anadarko acquired Kerr-McGee’s oil and gas businesses for $18 billion three months later.
Tronox declared bankruptcy in 2009 after spending as much as $126 million a year dealing with Kerr-McGee’s environmental problems, which stretched from Mississippi to Pennsylvania.
The Environmental Protection Agency argued that the bankruptcy did not dissolve all corporate responsibility for the toxic legacy. Shortly after its bankruptcy, Tronox sued Anadarko and its Kerr-McGee unit, arguing that Kerr-McGee had improperly unloaded the environmental liabilities on Tronox before the Anadarko takeover.
The Justice Department and the E.P.A. joined in the Tronox suit, saying Anadarko was the actual creditor for the damages the E.P.A. was trying to clean up.
The government sought more than $20 billion to clean up more than 2,700 polluted sites and compensate more than 8,000 people claiming respiratory ailments, cancer and other diseases from chemical exposure.
Recently, Anadarko estimated that it would finally pay between $850 million to $5.5 billion. Late last year, a federal bankruptcy judge suggested $5.2 billion to $14.2 billion in payments, and additional millions of dollars in lawyer fees.
Tronox agreed that the E.P.A. could collect damages, and the company was allowed to exit bankruptcy three years ago without additional cleanup costs. Suing Anadarko was a trust including the government, 11 states, the Navajo nation and trusts representing environmental and individual claimants.
The Navajo nation will earn $1 billion for damages from a uranium mining operation. And $1.1 billion will go to cleaning up a former chemical manufacturing site in Nevada that has led to pollution in Lake Mead. The E.P.A. will receive more than $430 million to clean up New Jersey Superfund sites.
The Justice Department argued that Kerr-McGee had restructured itself to isolate its environmental liabilities into a subsidiary and then sell off the business, which it renamed Tronox, but it was unsuccessful.
It spun off Tronox instead in an initial public offering of stock. In the opinion of the bankruptcy judge, Allan L. Gropper, the Kerr-McGee reorganization was a covert attempt to avoid environmental legal troubles.
He noted that Kerr-McGee began planning the change as early as 2000. The settlement is subject to approval by Judge Gropper and a federal court.
nytimes.com
The settlement, announced on Thursday, is aimed at restoring thousands of sites polluted by toxins and compensating thousands of people with personal injury claims.
The case stretches back almost a decade, originating with claims against Kerr-McGee, an Oklahoma energy and chemical company that is now a subsidiary of Anadarko, one of the country’s most successful oil and gas producers.
Anadarko had argued that it could not be held liable for pollution caused by Kerr-McGee, which had ostensibly passed the liabilities on to a spinoff company called Tronox, which later declared bankruptcy.
But a bankruptcy judge said the reorganization was simply an attempt to dodge liability. In announcing the settlement, the deputy attorney general, James M. Cole, said it reflected “the Justice Department’s firm commitment to preventing and combating all forms of fraud and to securing environmental justice.”
But oil experts said it was also a welcome development for Anadarko, removing a long distraction and possibly making the company — with interests from West Texas to West Africa and Algeria — a takeover target for a suitor looking to acquire new reserves.
Anadarko’s chief executive, Al Walker, issued a statement hailing the agreement, saying it “eliminates the uncertainty this dispute has created.”
Anadarko shares soared on news of the settlement, closing up 14.5 percent, in part because the sum was far lower than what the government originally sought.
“It removes a huge cloud hanging over the stock,” said Fadel Gheit, a senior oil analyst at Oppenheimer & Company. He called Anadarko “the most attractive takeover target because it has a premier position on the onshore U.S. and is one of the biggest leaseholders and operators in the Gulf of Mexico.”
Kerr-McGee gained notoriety in the 1970s when Karen Silkwood, a labor activist, claimed that the company was poisoning her with radioactive matter at its nuclear materials plant outside Crescent, Okla.
The latest chapter in its saga dates back at least to 2005, when the company spun off its chemical business as Tronox and transferred environmental liabilities to it. Anadarko acquired Kerr-McGee’s oil and gas businesses for $18 billion three months later.
Tronox declared bankruptcy in 2009 after spending as much as $126 million a year dealing with Kerr-McGee’s environmental problems, which stretched from Mississippi to Pennsylvania.
The Environmental Protection Agency argued that the bankruptcy did not dissolve all corporate responsibility for the toxic legacy. Shortly after its bankruptcy, Tronox sued Anadarko and its Kerr-McGee unit, arguing that Kerr-McGee had improperly unloaded the environmental liabilities on Tronox before the Anadarko takeover.
The Justice Department and the E.P.A. joined in the Tronox suit, saying Anadarko was the actual creditor for the damages the E.P.A. was trying to clean up.
The government sought more than $20 billion to clean up more than 2,700 polluted sites and compensate more than 8,000 people claiming respiratory ailments, cancer and other diseases from chemical exposure.
Recently, Anadarko estimated that it would finally pay between $850 million to $5.5 billion. Late last year, a federal bankruptcy judge suggested $5.2 billion to $14.2 billion in payments, and additional millions of dollars in lawyer fees.
Tronox agreed that the E.P.A. could collect damages, and the company was allowed to exit bankruptcy three years ago without additional cleanup costs. Suing Anadarko was a trust including the government, 11 states, the Navajo nation and trusts representing environmental and individual claimants.
The Navajo nation will earn $1 billion for damages from a uranium mining operation. And $1.1 billion will go to cleaning up a former chemical manufacturing site in Nevada that has led to pollution in Lake Mead. The E.P.A. will receive more than $430 million to clean up New Jersey Superfund sites.
The Justice Department argued that Kerr-McGee had restructured itself to isolate its environmental liabilities into a subsidiary and then sell off the business, which it renamed Tronox, but it was unsuccessful.
It spun off Tronox instead in an initial public offering of stock. In the opinion of the bankruptcy judge, Allan L. Gropper, the Kerr-McGee reorganization was a covert attempt to avoid environmental legal troubles.
He noted that Kerr-McGee began planning the change as early as 2000. The settlement is subject to approval by Judge Gropper and a federal court.
nytimes.com
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