March 31 (Bloomberg) -- Anadarko Petroleum Corp. is to appear in court on April 4 to argue that it should pay as little as $850 million on a $20.8 billion environmental damage claim sought by creditors of bankrupt Tronox Inc. and the federal government against its Kerr-McGee unit.
At this week’s hearing, U.S. Bankruptcy Judge Allan Gropper will consider Anadarko’s arguments on how much it should pay, as well as the plaintiffs’ request for attorney fees. Gropper ruled in December that Kerr-McGee improperly unloaded its environmental liabilities into Tronox before being taken over by Anadarko.
Anadarko, based in the Woodlands, Texas, disputes the size of the award sought by the U.S. and the Tronox creditors, which will go to environmental cleanup and to people who say they were made ill by Kerr-McGee’s pollution. Until the question is resolved, personal-injury claims, including those linked to creosote, can’t be paid.
“We are aggrieved that we have yet to receive compensation for our injuries as a result of the exposure to creosote for more than 30 years,” Carl A. Lee of Columbus, Mississippi, wrote in a March 25 letter to Gropper included in court papers.
Kerr-McGee spun off its chemicals business as Tronox in 2005 along with decades of environmental liabilities. About three months after the spinoff, Anadarko offered to buy Kerr-McGee’s oil and natural gas assets for $18 billion.
Burdened by the environmental debt, Tronox filed for bankruptcy in 2009 and sued Anadarko and Kerr-McGee. The U.S. joined in the suit, saying it was the true creditor considering the damage that the Environmental Protection Agency and other government bodies were responsible for repairing.
Anadarko said in January that it should pay $850 million to $4 billion. Gropper, in his December decision, suggested $5.2 billion to $14.2 billion, plus attorney’s fees.
The U.S. and trusts for Tronox creditors said in January that the number could be as high as $20.8 billion, including $62.6 million for attorneys. The U.S. had originally sought $25 billion to clean 2,772 polluted sites and compensate about 8,100 people affected by the contamination.
Tronox won permission to exit bankruptcy without paying the cleanup costs by agreeing that the EPA could get any damages from its lawsuit against Anadarko.
The trusts created for personal-injury claimants said they are scheduled to pay 7,611 claims for cancer, cardiovascular disease and respiratory ailments, most linked to creosote used in Avoca, Pennsylvania, which had a population of 2,664 in 2012.
The lawsuit is Tronox Inc. v. Anadarko Petroleum Corp., 09-ap-01198; the bankruptcy is Tronox Inc., 09-bk-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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