NEW YORK (Reuters) - Anadarko Petroleum Corp’s agreement to pay $5.15 billion to clean up nuclear fuel and other pollution moved one step closer to reality on Wednesday, receiving a bankruptcy judge’s rubber stamp.
The agreement reached in April, touted by the U.S. Department of Justice as the largest-ever environmental cleanup recovery, resolved a lawsuit against Anadarko and its Kerr-McGee unit from creditors of Tronox Inc, the paint materials maker that was once a subsidiary of Kerr-McGee.
The lawsuit, which was joined by the DOJ, alleged that Tronox’s 2009 bankruptcy was caused by the environmental liabilities it took on when Kerr-McGee spun it off in 2005. It said the spinoff was a scheme by Kerr-McGee to get the liabilities off its books and make itself a more attractive takeover target for Anadarko, which acquired it in 2006.
Judge Allan Gropper, in U.S. Bankruptcy Court in New York, presided over Tronox’s bankruptcy and the Anadarko lawsuit. He approved the settlement at a hearing on Wednesday over the objections of some smaller claimholders who said the deal did not go far enough.
“Everybody wins,” Gropper said. “I can see only a benefit from the settlement.”
The deal will not be official until it gets the approval of a federal district court judge. A lawyer for the Tronox creditors told Reuters he expects that to happen “within the next few months.” The deal is not expected to face much resistance.
Despite the hefty price tag, the settlement is a win for Anadarko shareholders because Gropper had initially estimated that the company’s liability could be as high as $14.17 billion.
The money will fund a wide array of projects across some 2,000 U.S. sites, including $1.1 billion to address contamination from 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. The Navajo Nation will get about $1 billion to address radioactive contamination from Kerr-McGee’s old uranium mining operation.
The lawsuit had also blamed Kerr-McGee’s use of coal tar creosote, which the Environmental Protection Agency has said is a probable cause of cancer.
Tronox, which shed the environmental liabilities through the bankruptcy, emerged from Chapter 11 in 2011.
The case is Tronox Inc et al. v. Kerr McGee Corp et al., U.S. Bankruptcy Court, Southern District of New York, No. 09-1198.
Reporting by Nick Brown; editing by Andrew Hay