Feds Hope $5 Billion Settlement A Lesson For Polluters

April 5, 2014

This week, the federal government announced a record-breaking $5 billion settlement in a remarkable environmental case. The toxic legacy of the company involved, Kerr-McGee, stretches back 85 years and includes scores of sites across the country.

Kerr-McGee ran uranium mines on the Navajo Nation, wood-treating businesses across the Midwest and East Coast and a perchlorate plant on a tributary of Lake Mead, the nation’s largest reservoir — and it was messy.

“Kerr-McGee’s business all over this country left significant, lasting environmental damage,” said Deputy U.S. Attorney General James Cole, who announced the plan in a press conference in Washington.

The company contaminated Lake Mead with toxic perchlorate, a component of rocket fuel, and exposed people on rural Indian reservations and in big city Chicago to radioactive wastes.

Kerr-McGee also left communities and the federal government to pay for cleanups. Over decades the government tried to get the company to pay to clean up, but Cole says the company tried to dodge responsibility.

It split off its profitable oil and gas business and sold it for $18 billion to Anadarko Petroleum Corporation. The rest of the company filed for bankruptcy.

“This plan was intended to isolate and shed these liabilities through a complicated, multistep corporate reorganization,” Cole says. “Had Kerr-McGee gotten away with its scheme it would have skirted its responsibility for cleaning up contaminated sites around the country.”

Instead, a bankruptcy court found that the reorganization was fraudulent, and now Kerr-McGee’s buyer, Anadarko, will pay the $5 billion tab to clean up Kerr-McGee’s pollution and compensate people who were harmed by it.

Among those people were those who lived in a residential community in New Jersey. U.S. Attorney Preet Bharara says their homes were built on the company’s creosote waste.

“Those families didn’t know that their homes were built on top of pools of toxic waste until 1996, when sludge literally began to bubble up into one resident’s basement,” Bharara says.

And in the Navajo Nation in Arizona, Kerr-McGee’s uranium mines contaminated the water people drink, give their cattle and play in. The tribe even made a comic book to warn children about the danger of swimming in radioactive water.

The government says the $5 billion dollar settlement should more than cover the costs of cleaning up the company’s toxic legacy. Bharara says the size of the settlement should send a strong message.

“If you are responsible for 85 years of poisoning the earth, then you are responsible for cleaning it up,” he says.

The government says the benefit of settling instead of taking the company to court is that the money will be available as soon as the court OKs the settlement, instead of years in the future.

Anadarko declined to record an interview with NPR, but in a press release, the company said by settling it was eliminating the uncertainty the dispute created. The company’s stock jumped up significantly after the news.

Business analysts say that suggests Anadarko is in good enough shape to pay $5 billion without crippling itself.

Mark Latham, a professor at Vermont Law School, says the settlement shows just how far reaching the country’s toxic waste laws are.

“You might put off the day of reckoning for years as we’ve done here, but sooner or later those efforts are likely to be unsuccessful and you’ll be on the hook for hundreds of millions, if not more,” Latham says.

Latham also says there’s a lesson here for big corporations like Anadarko, to heed the old adage: buyer beware.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

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