$5.15B Environmental Settlement in Anadarko / Kerr-McGee

For those law school ADR Evangelists looking for opportunities to woo colleagues from other doctrinal disciplines, the Anadarko / Kerr-McGee settlement yesterday should have you scrambling to talk with your faculty colleagues in Environmental Law and in Bankruptcy.

My short (and admittedly potentially still not as well-informed as it should be) version is this:

Kerr-McGee, an Energy & Chemical company, had among other things in its portfolio, considerable environmental damage associated with its nuclear fuel, wood creosote, and rocket fuel.  At some point, Kerr-McGee spun off a company called Tronox, which incurred many of those environmental liabilities.  Not terribly long after that, Anadarko Petroleum bought Kerr-McGee.  Tronox fell into bankruptcy.

A trust representing the U.S., about a dozen states, and some tribes, sued Andarko and Kerr-McGee, and they argued that Andarko and Kerr-McGee should assume the responsibility for the Tronox portfolio of environmental liabilities.  The US Attorney involved called it a “corporate shell game” aimed at avoiding liability.  And that argument won the day.

The settlement is larger than the BP Settlement (although without the publicity). It includes $4.4B in various settlement trusts around the country.  Pretty DOJ graphic available here.

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Anadarko stock prices “soared” on news of the $5.15B settlement, as there had been speculation that it could reach far higher.

The National Law Journal story is available here.  Reuters here. NYT here.


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