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Defunct energy company to pay record penalty for environmental damage

May 14, 2014
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<photocredit>Lake Mead (DesignforU/iStockphoto/Thinkstock)</photocredit>

The now-defunct energy company Kerr-McGee Corporation, which was taken over by Anadarko Petroleum Corporation in 2006, will have to pay a record penalty of $5.15 billion under a settlement reached with the Department of Justice.

About $4.4 billion of the sum will be used for environmental cleanup and to settle environmental claims regarding several decades in which Kerr-McGee had been polluting the environment, the Corporate Crime Reporter said.

Deputy Attorney General James Cole commented that the company had caused long-lasting and widespread damage in the years of its operations. Not only did it pollute multiple locations and water resources across the United States, but it also attempted to avoid taking responsibility by trying to defraud taxpayers through a fraudulent conveyance case in the bankruptcy of Tronox Inc., he added. By coming up with an elaborate scheme of mergers and restructuring, the company attempted to "spin off" its environmental liabilities, while failing to provide Tronox with sufficient assets, eventually pushing it into bankruptcy, Cole said.

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The environmental damage was caused over the course of 85 years, Cole pointed out. Among the worst cases of contamination recorded is the pollution of Lake Mead by Kerr-McGee's perchlorate business. Pollution spread into the Colorado River and to numerous communities in the southern states. The company's mining operations, meanwhile, resulted in accumulation of radioactive waste on the land of the Navajo Nation, he explained.

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