Tronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

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Tronox Bankruptcy Settlement Resources EPA-Lead Funded Sites and Communities Information Sheet Press Release(11/23/10) Consent Decree (PDF) (506pp, / 2.99MB, About PDF ) 

# Tronox Incorporated Bankruptcy Settlement The U.S. Environmental Protection Agency (EPA), the U.S. Justice Department (DOJ), and the U.S. Attorney’s Office for the Southern District of New York today announced that Tronox Incorporated (“Tronox”) has agreed to resolve its environmental liabilities with EPA, other federal, state, and local agencies, and the Navajo Nation (collectively, the “Governments”) relating to numerous contaminated sites around the country. Pursuant to the settlement agreement, the Governments will receive, among other consideration, $270 million and 88 percent of Tronox’s interest in a pending fraudulent conveyance litigation. The settlement agreement addresses EPA’s claims in Tronox’s bankruptcy case relating to liabilities under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly known as Superfund), Resource Conservation and Recovery Act (RCRA), Clean Air Act (CAA), and Clean Water Act (CWA). The bankruptcy settlement will reimburse EPA for past cleanup costs and fund future cleanup costs at contaminated sites across the country. On this page: Overview of the company Background information on the bankruptcy proceedings The Anadarko Litigation Overview of the settlement agreement Overview of trusts Comment period Contact 

## Overview of the company Tronox, a Delaware corporation based in Oklahoma City, Okla., is a multi-national chemical company that makes and sells titanium dioxide and electrolytic and specialty chemicals. Tronox is the world’s third largest manufacturer of titanium dioxide pigment, which is used in a wide variety of applications, including coatings, plastics, paper, and everyday consumer products. Tronox operates in North America, Europe, and Australia. The company was created through a spin-off from Kerr-McGee Corporation (“Kerr-McGee”). Several months after the spin-off was completed, Anadarko Petroleum Corporation (“Anadarko”) purchased Kerr-McGee for $18 billion.

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## Background information on the bankruptcy proceedings The company commenced bankruptcy proceedings on January 12, 2009 by filing voluntary petitions for relief under Chapter 11 of the U.S. Code in the U.S. Bankruptcy Court for the Southern District of New York. On August 11, 2009, DOJ filed proofs of claim on behalf of EPA to recover, among other things, past and future environmental response costs relating to 18 named sites in seven Regions, including a claim in the amount of at least $335.5 million in connection with costs EPA incurred cleaning up the Federal Creosote Superfund Site in Manville, N.J. The U.S. also filed proofs of claim in a protective manner with respect to sites owned or operated byTronox, sites where Tronox has injunctive obligations, and hundreds of other sites impacted by the spinoff. EPA’s claims included a claim for penalties stemming from inspections and reviews of a Tronox facility Compliance and

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Revitalization ShareTronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html[6/8/2011 7:13:23 AM] in Savannah, Ga. On September 30, 2010, the bankruptcy court approved Tronox’s amended disclosure statement. A hearing to consider the approval of Tronox’s plan of reorganization was held on November 17, 2010. The settlement agreement is consistent with the terms of the plan of reorganization, which settles Tronox’s legacy liabilities and facilitates Tronox’s emergence from bankruptcy protection.

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## The Anadarko LitigationOn May 12, 2009, Tronox filed a complaint in the bankruptcy proceedings against Anadarko and KerrMcGee (collectively, the “Defendants”), seeking to avoid and recover certain allegedly fraudulent transfers associated with the spin-off (the “Anadarko Litigation”). At the core of the complaint is the allegation that the Defendants imposed on Tronox years’ worth of legacy liabilities, including enormous environmental obligations, and as a consequence rendered Tronox insolvent and severely undercapitalized. Based on similar allegations, the U.S. intervened in the Anadarko Litigation to recover response costs for environmental cleanups at numerous sites around the country.

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## Overview of the settlement agreement Under the settlement agreement, the Governments will receive: (1) $270 million in cash; (2) 88 percent of Tronox’s interest in the pending Anadarko Litigation; (3) Cash value of existing letters of credit and bonds applicable to certain sites; (4) Certain Nevada assets, including real property located in Henderson, Nev.; and (5) $3 million for certain expenses incurred in negotiating the settlement agreement. EPA-lead sites will receive, either through the trusts described below or directly by EPA, approximately $59 million and 45 percent (of the 88 percent) of any proceeds from the Anadarko Litigation. The approximate $59 million received for EPA-lead sites will be divided among the following sites, several of which are to be placed into the trusts described below:
1

. Abandoned Uranium Mine Sites in and near the Navajo Nation territory 2

. Federal Creosote Superfund Site in Manville, N.J. 3

. Flat Top Mine in Ludlow, S.D. 4

. Former wood treating site, Columbus, Miss. 5

. Former wood treating site, Meridian, Miss. 6

. Kerr-McGee Chemical Corporation Superfund Site in Navassa, N.C. 7

. Kerr-McGee Chemical Corporation Superfund Site in Soda Springs, Idaho 8

. Kerr-McGee Chemical, LLC Superfund Site in Jacksonville, Fla. 9

. Kerr-McGee Superfund Sites in West Chicago, Ill. 10

. Lindsay Light Removal Sites in Chicago, Ill. 11

. Moss American Superfund Site in Milwaukee, Wis. 12

. North Cave Hills/Riley Pass Site in Harding County, S.D. 13

. Quivira Church Rock Mine Site, N.M. 14

. Toledo Tie Treatment Site in Toledo, Ohio 15

. Tronox Pigments (Savannah), Inc. facility in Savannah, Ga. 16

. Welsbach and General Gas Mantle Contamination Superfund Site in Camden and Gloucester City, N.J. 17

. White King/Lucky Lass Superfund Site in Lakeview, Ore. More site-specific information is available below and on the Tronox EPA-funded sites and communities web page
.

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## Overview of trusts The Governments’ environmental claims will be resolved pursuant to the settlement agreement, which provides for the creation of five environmental response trusts and a litigation trust. Environmental Response TrustsTronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html[6/8/2011 7:13:23 AM] Litigation Trust Treatment of other sites and/or claims under the settlement 

### Environmental Response Trusts The settlement agreement contemplates the creation of five separate trusts to address the many sites Tronox owned as of the commencement of the bankruptcy cases but will not operate (except for the Henderson, Nevada facility, which Tronox will continue to operate through a lease) upon emerging from bankruptcy protection. On the effective date of Tronox’s plan of reorganization, Tronox will place these sites into the appropriate environmental response trust and simultaneously fund the trusts. The funding of the environmental response trusts (approximately $205 million in total) will provide funding to the respective trustees forfuture cleanup work and other administrative costs associated with the sites. Funding is provided on a siteby-site basis through trust accounts with a possibility for reallocation. In general, the environmental response trusts will have the following purposes: conduct cleanup work at the sites; manage the sites and pay associated administrative costs; and ultimately try to sell or transfer the sites, subject to the approval of both EPA and the applicable state. Trustees selected by the Governments for each environmental response trust will be appointed by the bankruptcy court to administer the trusts and to oversee site cleanups under the oversight of a lead governmental agency. The five environmental response trusts will be governed by separate trust agreements, which remain the subject of ongoing negotiation. Multi-State Trust Site-Specific Trusts

Multi-State Trust The vast majority of Tronox’s owned but non-operating sites, as well as a number of Tronox-owned service stations in several states, will be placed into a multi-state environmental response trust. The multi-state environmental response trust will hold both state- and federal-lead sites. The initial funding levels and the Anadarko Litigation percentage payouts for each site in the multi-state environmental response trust, including allocations for administrative costs, are set forth in the table below in alphabetical order by the state in which the sites are located.

Site and/or Location Lead Agency Cash Funding* Anadarko Litigation Percentage** Administrative funding

- $16,936,352 1.155% Birmingport, Ala. State $402,395 0.010% Theodore (Mobile), Ala. State $21,587,129 6.000% Jacksonville, Fla. (Ag Chem) EPA $4,220,981 2.000% Jacksonville, Fla. (Petroleum Terminal) State $38,957 0.000% Soda Springs, Idaho EPA $6,050,929 2.000% Madison, Ill. State $1,294,468 0.150% Sauget, Ill. State $3,960,429 0.100% Indianapolis, Ind. State $366,782 0.050% Rushville, Ind. State $1,795 0.001% Bossier City, La. State $897,624 0.500% Calhoun, La. State $2,720,947 0.250%Tronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html[6/8/2011 7:13:23 AM] Kansas City, Mo. State $1,743,398 0.500% Springfield, Mo. State $2,025,323 0.500% Columbus, Miss. EPA $5,520,102 1.500% Meridian, Miss. EPA $1,298,956 0.500% Wilmington (Navassa), N.C. EPA $4,208,555 2.000% Bristol Mine, Pioche, Nev. To be determined $17,952 0.003% Caselton Mine, Pioche, Nev. To be determined $269,287 0.150% Rome, N.Y. State $700,000 0.400% Cleveland, Okla. State $8,036,586 1.000% Cushing, Okla. State $8,719,555 2.000% Avoca, Pa. State $4,101 0.000% Beaumont, Texas State $1,651,132 0.500% Corpus Christi, Texas State $215,477 0.000% Texarkana, Texas State $2,537,176 0.500% Service Stations (Owned) State $2,028,696 0.150% Service Stations (Non-owned) State $315,989 0.500% Other sites*** To be determined $0 3.000% Total $97,771,073 25.419% * Does not include site-specific financial assurance, insurance, or real estate assets. ** Percent of 88% share of net Anadarko Litigation proceeds. *** These are sites for which the U.S. and certain states are providing covenants not to sue under the settlement agreement.
Site-Specific Trusts Four separate environmental response trusts are being created for the following sites due to the unique nature of the sites. The initial funding levels and the Anadarko Litigation percentage payouts for the four, non-multi-state trusts, including allocations for administrative costs, are set forth in the table below.

Environmental Response

Trust Site(s) Description/Lead Agency(ies) Cash Funding* Anadarko Litigation Percentage**

Cimarron, Okla. A former nuclear fuel processing facility in Cimarron, Oklahoma. The Nuclear Regulatory Commission and the state of Oklahoma will be the lead agencies, with distinct responsibilities, for the trust. $8,638,384 1.839%

Henderson, Nev. Tronox's active manufacturing facility in Henderson, Nevada. The state of Nevada will be the lead agency for the trust. $81,020,018 25.000%

Savannah, Ga. A semi-operational manufacturing facility in Savannah, Georgia. The state of Georgia will be the lead agency for the trust. $7,107,355 1.285%

West Chicago, Ill. Superfund sites associated with the Rare Earths Facility, a former thorium and other radioactive materials plant, in West Chicago, Illinois. EPA, the Illinois EPA, and IllinoisEmergency Management Agency will be the lead and nonlead agencies. $10,356,820 0.000%

Total $107,122,577 28.124% * Does not include site-specific financial assurance, insurance, or real estate assets. ** Percent of 88% share of net Anadarko Litigation proceeds.

Top of PageTronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html[6/8/2011 7:13:23 AM] 

### Litigation Trust Tronox’s rights to the Anadarko Litigation , including Tronox’s rights to any relief awarded in the litigation, will be contributed to the litigation trust for the benefit of the Governments and Tronox’s tort claimants and certain non-governmental environmental claimants (collectively, the "tort claimants"). The litigation trust, to be funded by $25 million of the $270 million of up-front cash provided by Tronox under the settlement, will be governed by a separate agreement, which remains the subject of ongoing negotiation. The litigation trust will provide that the Governments and the tort claimants receive 88 percent and 12 percent, respectively, of Tronox's interest in the Anadarko Litigation.


### Treatment of other sites and/or claims under the settlement Sites contaminated by Tronox and its predecessor companies that are not currently owned by Tronox are also receiving funding pursuant to the settlement agreement. In addition, a portion of the $270 million of up-front cash will resolve the Governments’ various claims for past costs, natural resource damages, and penalties relating to Tronox-owned and non-owned sites. The initial funding levels and the Anadarko Litigation percentage payouts for each such site, combining separate recoveries by the Governments for a particular site, are set forth in the table below in alphabetical order by the state in which the sites are located.
Site and/or Location Receiving Entity * Cash Funding** Anadarko Litigation Percentage*** Anniston, Ala. State $6,320 0.010% Birmingham, Ala. State $179,525 0.100% Mansfield Canyon, Ariz. FS $94,797, 0.150% Juniper Mine, Calif. FS $191,490 0.303% Jacksonville, Fla. (Ag Chem) EPA $1,896 0.003% Brunswick, Ga. State $632 0.001% Savannah, Ga. EPA and State $6,952 0.011% Chicago, Ill. sites EPA $5,686,628 2.700% Decatur, Ill. State $632 0.001% Mount Vernon, Ill. State $94,797 0.150% West Chicago sites, Ill. EPA and State $111,747 0.201% Bossier City, La. State $106 0.00017% Calhoun, La. State $107 0.00017% Dubach, La. State $2,315 0.00366% Hanover, Mass. State $1,044,660 1.653% Kansas City, Mo. State $20,801 0.033% Springfield, Mo. State $73,996 0.117% Columbus, Miss. EPA $5,386 0.003% Hattiesburg, Miss. State $389,310 0.100% Wilmington (Navassa), N.C. EPA, DOI/NOAA, and State $917,732 0.503%
Federal Creosote site, Manville, N.J. EPA and State $3,398,485 5.575% Welsbach site, Camden and Gloucester City, N.J. EPA $3,159,890 5.000%
Quivira Church Rock Mine, N.M. EPA $1,263,956 2.000% Uranium mine sites in or near Navajo Nation territory EPA $12,039,562 20.000%Tronox Bankruptcy Settlement | Compliance and Enforcement | US EPA

http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html[6/8/2011 7:13:23 AM] EPA Home Privacy and Security Notice FOIA Contact Us http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/index.html Print As-Is Last updated on Wednesday, November 24, 2010 Ship Rock Mill, N.M. Navajo Nation $1,231,978 1.000% Caselton Mine, Pioche, Nev. BLM $6,320 0.010% Rome, N.Y. State $4,323 0.005% Toledo, Ohio EPA and State $256,856 0.215% Cleveland, Okla. State $112,749 0.160% Gore, Kriner/Stigler, and Wynnewood sites, Okla. State $94,797 0.150%
Cushing, Okla. State $49,551 0.060% Lakeview, Ore. EPA $448,812 0.250% Flat Top Mine, S.D. EPA $631,978 1.000% North Cave Hills/Riley Pass, S.D. EPA and FS $7,368,730 4.113% Texarkana, Texas DOI and State $484,115 0.466% Milwaukee, Wis. EPA $724,419 0.410% Total $40,106,350 46.453% * Receiving entities include the following: EPA, various state environmental agencies, the Forest Service (FS), the Department of Interior (DOI), and the National Oceanic and Atmospheric Administration (NOAA), the Bureau of Land Management (BLM), and the Navajo Nation. ** Does not include site-specific financial assurance, insurance, or real estate assets. *** Percent of 88% share of net Anadarko Litigation proceeds. Top of Page 

## Comment period The proposed settlement, filed with the U.S. Bankruptcy Court for the Southern District of New York, is subject to a 30-day public comment period and final court approval. Information on submitting comments is available at the Department of Justicewebsite.

Top of Page For more information, contact: Craig Kaufman Attorney Advisor U.S. Environmental Protection Agency (MC2272A) 1200 Pennsylvania Avenue, NW Washington, D.C. 20460 (202) 564-4284 kaufman.craig@epa.gov

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