KRVS

Feds Hope $5 Billion Settlement A Lesson For Polluters

Apr 5, 2014
Originally published on April 5, 2014 10:26 am

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 in 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 settlement during a news conference in Washington.

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

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

The company 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, multi-step 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 residents ofManville,N.J. 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 settlement should more than cover the costs of cleaning up the company's toxic legacy. Bharara says the size of the settlement should also 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 Anadarko is in good enough financial 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 2018 NPR. To see more, visit http://www.npr.org/.

SCOTT SIMON, HOST:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. The federal government announced a record-breaking, $5 billion settlement this week in a remarkable environmental case. The company involved is Kerr-McGee. Its toxic legacies stretches back 85 years, and it involves scores of sites across the country. NPR's Elizabeth Shogren reports that the government hopes the enormous settlement is going to send a message to polluters that they will pay to clean up a mess.

ELIZABETH SHOGREN, BYLINE: Kerr-McGee ran uranium mines in the Navajo Nation wood-treating businesses across the Midwest and East Coast, and a perchlorate plant on a tributary of the nation's largest reservoir, Lake Mead. And it was messy.

(SOUNDBITE OF PRESS CONFERENCE)

JAMES COLE: Kerr-McGee's business, all over this country, left significant, lasting environmental damage.

SHOGREN: James Cole is the deputy U.S. attorney general who announced the plan in a press conference in Washington. The company contaminated Lake Mead with toxic perchlorate, a component of rocket fuel. It exposed people on an Indian reservation and a big-city Chicago to radioactive wastes. It left communities and the federal government to pay for cleanups.

Over the decades, the government tried to get the company to pay to clean up. 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 Corp. The rest of the company filed for bankruptcy.

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

SHOGREN: Instead, a bankruptcy court found that reorganization was fraudulent. And now Kerr-McGee's buyer, Anadarko, will pay the $85 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 waste.

PREET BHARARA: 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.

SHOGREN: 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 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.

BHARARA: If you are responsible for 85 years of poisoning the earth, then you are responsible for cleaning it up.

SHOGREN: 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 the $5 billion without crippling itself. Mark Latham is a professor at Vermont Law School who says the settlement shows just how far-reaching the country's toxic waste laws are.

MARK LATHAM: You might put off the day of reckoning for years, as was 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.

SHOGREN: And Latham says there's a lesson here for big corporations like Anadarko. They should heed the old adage buyer beware.

Elizabeth Shogren, NPR News, Washington. Transcript provided by NPR, Copyright NPR.