Environmental Protection

Tronox Settles with EPA for $270M

Tronox Inc. has agreed to resolve its environmental liabilities for $270 million and 88 percent of the company’s interest in pending litigation, according to the U.S. Environmental Protection Agency, the Justice Department, and the U.S. attorney for the Southern District of New York.

The bankruptcy settlement will reimburse EPA for past cleanup costs and fund future cleanups at contaminated sites across the country. Tronox, one of the world's largest producers of whitening pigment, and 14 of its affiliates filed for Chapter 11 bankruptcy protection in January of 2009. At that time, the company was potentially responsible for past costs incurred and future response costs under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, commonly known as Superfund) and the Resource Conservation and Recovery Act (RCRA) relating to sites throughout the country, as well as for penalties under CERCLA, RCRA, the Clean Air Act, and the Clean Water Act.

Under the terms of the settlement, Tronox will pay $270 million in cash. The majority of the funding will be placed in five environmental response trusts for the cleanup. One of those, run by several states, will take control of 25 contaminated properties in 14 states and will perform or fund cleanup of hazardous substances at more than 1,800 potentially contaminated former service station properties. The other trusts focus on fewer sites.

Tronox will also turn over non-cash assets – such as insurance and financial assurance assets worth at least $50 million, including property located in Henderson, Nev. – to the environmental response trusts.

Tronox, a Delaware corporation based in Oklahoma City, is a multi-national chemical company that makes and sells titanium dioxide and other specialty chemicals used in plastics, paper, and inks. The company has customers in more than 90 countries, and it operates in North America, Europe, and Australia. Tronox was created through a spin-off from the Kerr-McGee Corporation. Several months after the spin-off was completed, Anardarko Petroleum Corporation purchased Kerr-McGee for $18 billion.

Tronox is involved in litigation against Anadarko and Kerr-McGee over allegations that those companies imposed years’ worth of legacy liabilities, including environmental obligations, on Tronox, leaving Tronox insolvent and undercapitalized. The trial is expected to begin in late 2011 or early 2012. Eighty-eight percent of any settlement awarded to Tronox as a result of that litigation would go to the trusts to fund additional cleanup efforts.

Before being considered by the bankruptcy court for approval, the settlement will be lodged with the bankruptcy court for a period of 30 days to provide public notice and to allow members of the public to comment on the settlement.

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