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 The agreement resolves a long-running lawsuit against the Kerr-McGee
energy and chemical company, which Anadarko bought in 2006. The case
was brought by a trust representing the U.S. government, 11 state
governments, Indian tribes and individuals.
The trust was seeking cleanup costs at more than 2,000 sites
nationwide. It was also seeking payment for claims from more than
8,000 people who said their exposure to Kerr-McGee's wood treatment
plants in Avoca, Pennsylvania and Manville, New Jersey caused
cancer, which in some cases led to death.
"If you are responsible for 85 years of poisoning the earth, you are
responsible for cleaning it up," the U.S. Attorney for Manhattan,
Preet Bharara, said at a news conference announcing the settlement.
Despite the size of the settlement, investors cheered, boosting
Anadarko's share price 14.5 percent to $99.02 per share. Analysts
said the company was facing the possibility of having to pay a much
higher price.
"This is a premier exploration company that has this dark cloud
hanging over them and now its gone," said Fadel Gheit, oil analyst
at Oppenhemier.
Anadarko had argued the environmental liabilities belonged to Tronox
Ltd, a paint and chemicals company that was spun off from
Kerr-McGee. The sale of Tronox, which ultimately fell into
bankruptcy, happened before Anadarko's purchase.
In December, U.S. Bankruptcy Judge Allan Gropper of New York said
Kerr-McGee knew the spin-off would harm Tronox's business by
weighing it with heavy environmental liabilities. He said Anadarko
should pay from $5.15 billion to more than $14 billion in cleanup
costs. Anadarko said after the ruling the liabilities should be as
little as $850 million.
Tronox, which makes titanium dioxide used in paints, said in a
statement that the accord means "the cleanup of the Kerr-McGee
legacy environmental damages can begin and people injured by those
actions can finally be compensated."
RECORD SETTLEMENT
At one point Kerr-McGee gave Tronox control of a nuclear fuel plant
in Oklahoma, where activist worker Karen Silkwood had been employed
years earlier. Meryl Streep portrayed her in the eponymous 1983 film
about her fight to improve workers' safety before her death in a car
accident.
The settlement with Anadarko is the largest environmental
enforcement settlement ever by the Department of Justice, larger
even than its plea agreement with BP over its massive 2010 Gulf oil
spill, which resulted in $4 billion in criminal fines for the
British company.
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The lawsuits blamed Kerr-McGee's use of coal tar creosote, which the
Environmental Protection Agency has said is a probable cause of
cancer. Another troublesome operation was Kerr-McGee's decades-old
jet and rocket fuel manufacturing plant in Henderson, Nevada, where
ammonium perchlorate, a primary fuel component, penetrated soil and
then groundwater, causing potential harm to people in Nevada,
California and Arizona.
Anadarko said in a statement that it would record a net $550 million
tax benefit from the agreement.
"This settlement agreement with the Litigation Trust and the U.S.
Government eliminates the uncertainty this dispute has created,"
Anadarko Chief Executive Officer Al Walker said.
A Department of Justice source who asked not to be identified said
"Anadarko was not found to have done anything wrong."
CLEANUP
The $5.15 billion settlement will fund a wide array of projects,
including $1.1 billion to address the perchlorate contamination in
Nevada, the litigation trust said in a statement.
The Navajo Nation will get about $1 billion to address radioactive
contamination from Kerr-McGee's decades-old uranium mining
operation. Another $1.1 billion will go toward cleanup at more than
two dozen contaminated sites around the country.
Tronox used its Chapter 11 bankruptcy protection case to shed the
environmental liabilities it had inherited in the spinoff by
assigning them to a litigation trust. It emerged from bankruptcy in
2011.
The trust in turn sued Anadarko and Kerr-McGee, arguing the spinoff
was a fraudulent ploy by Kerr-McGee to offload its cleanup
responsibilities and make itself a more valuable takeover target for
Anadarko, and that it doomed Tronox by loading it up with too much
liability.
U.S. Attorney Bharara said Kerr-McGee had tried to avoid the cleanup
"through a corporate shell game."
(Additional reporting by Julia Edwards, Ayesha Roscoe and David
Ingram in Washington, D.C., and Terry Wade and Anna Driver in
Houston; editing by Tom Hals in Wilmington, Delaware and Grant
McCool)
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