The Environmental Protection Agency, Department of Justice, and Anadarko Petroleum Corporation recently announced the settlement of a fraudulent-conveyance lawsuit over Kerr-McGee Corporation’s Superfund sites. The DOJ and EPA accused Kerr-McGee and Anadarko of fraudulently conveying the assets of Kerr-McGee’s chemicals business in an effort to avoid paying for the clean-up of hundreds of Superfund sites. Between 2002 and 2005, Kerr-McGee transferred its more profitable oil and gas assets to a new entity. Anadarko acquired these assets only months after the transfer in 2005. In 2006, Kerr-McGee transferred its assets associated with the Superfund sites to another company called Tronox Inc. Tronox then became financially overwhelmed by the clean-up responsibilities and filed for bankruptcy in 2009.
The settlement calls for Anadarko to pay $5.1 billion into a litigation trust to be distributed to environmental and tort beneficiaries. Coupled with the $270 million in recoveries from the related Tronox bankruptcy settlement, these settlements constitue the largest recovery for the clean-up of environmental contamination in history. Anadarko reached the settlement with the government following a month-long trial in the Bankruptcy Court for the Southern District of New York where the court held Kerr-McGee and related Anadarko subsidiaries liable for fraudulent conveyance. The parties agreed to the settlement before the court reached its decision on damages. The settlement will cover more than 2,700 Superfund sites around the country and approximately 50 uranium mines near the Navajo Nation in Arizona and New Mexico.