Record Pollution Settlement: $5.15 Billion

Surpassing the BP Gulf spill fine by $1 billion, the settlement covers multi-state environmental sites. While levied on Anadarko Petroleum, the chemical contamination was the fault of subsidiary Kerr-McGee Corp., which Anadarko purchased in 2006.

2 minute read

April 5, 2014, 9:00 AM PDT

By Irvin Dawid


"Nearly $1 billion of the settlement will go to the Environmental Protection Agency to pay to cleanup uranium mines in and around the Navajo Nation's territory in the Southwest. Another $1.1 billion is earmarked for a trust that pays for remediation at a former chemical manufacturing site in Nevada that contaminated Lake Mead. Some $450 million will go towards the cleanup of Superfund sites in New Jersey," write Patrick Fitzgerald, Daniel Gilbert and Andrew Grossman.

Timothy Cama of The Hill's E2 Wire explains that Anadarko had "tried to dodge liability 'in a corporate shell game'" as Kerr-McGee had spun-off the unit responsible for the massive pollution into the chemical company, Tronox Inc. in 2006, saddling them with enormous debt that lead to their bankruptcy in 2009. Thursday's settlement was the result of a lawsuit by creditors of Tronox Inc. and the U.S. Department of Justice against Anadarko, the parent company of Kerr-McGee.

"Preet Bharara, U.S. attorney for the southern district of New York, said Kerr-McGee’s toxic waste hit Navajo Nation communities the hardest," writes Cama.

The Journal reporters write that "(i)n December, a bankruptcy judge sided with Tronox creditors and found Anadarko liable for between $5.2 billion and $14.2 billion, a ruling that jolted settlement discussions into high gear, according to analysts and people involved in the case."

The irony is that yesterday's record settlement resulted in Anadarko's stock soaring 14.5%. "How come?", you may ask. It could have been far worse according to investors.

The Department of Justice press release proclaims that the settlement allows "More Than $4.4 Billion to Be Available for Environmental Clean-up and Claims Largest Payment for the Cleanup of Environmental Contamination in History."

To contrast the $5.15 billion settlement with the recent post describing the largest settlement for polluting waterways, Alpha Natural Resources, the nation's third largest coal company, will pay $227.5 million, including clean-up costs.

Friday, April 4, 2014 in The Wall Street Journal - Business

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