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TiO2 Pigment Producer Tronox Inc. Agrees to $270 Million Settlement on Environmental Liabilities

Wednesday, November 24, 2010

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The EPA, the Justice Department and the U.S. Attorney for the Southern District of New York announced that titanium dioxide (TiO2) producer Tronox Inc. has agreed to resolve its environmental liabilities for $270 million and 88% of Tronox’s interest in pending litigation involving the company’s former owner.

The bankruptcy settlement will reimburse EPA for past cleanup costs and fund future cleanups at contaminated Tronox sites, the agency said. Tronox is reported to be the world’s third-largest producer of TiO2.

Tronox and 14 of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code in January 2009 in the U.S. Bankruptcy Court for the Southern District of New York. At the time of the bankruptcy filing, the company was potentially responsible for past costs incurred and future response costs under Superfund (the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA) 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, EPA said in announcing the settlement.

Tronox was created through a spin-off from the Kerr-McGee Corp. Several months after the spinoff was completed, Anardarko Petroleum Corp. purchased Kerr-McGee for $18 billion.

Under terms of the settlement, Tronox will pay $270 million in cash, with the majority of the funding to be placed in five environmental-response trusts for the cleanup of a number of sites, most of which have been contaminated with hazardous substances or waste. Non-cash assets, such as insurance and financial-assurance assets worth at least $50 million, including property located in Henderson, Nev., will also be provided by Tronox to the environmental response trusts.

The agreement lists 17 sites, although TiO2 pigment production is specifically identified at only one site, in Savannah, Ga. Operations at other sites included uranium mining; wood treatment; fertilizer and pesticide formulating and packaging; vanadium mining and processing; rare-earth production; and others. The Savannah site includes a TiO2 pigment plant and sulfuric-acid plant.

Tronox, a Delaware corporation based in Oklahoma City, Okla., 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 located in more than 90 countries and 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 currently 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. EPA said 88% of any settlement awarded to Tronox as a result of that litigation will be used 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 afford members of the public the opportunity to comment on the settlement, EPA said.

Information about the settlement: Tronox settlement agreement.


Tagged categories: EPA; Regulations; Titanium dioxide; Tronox

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