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Tronox Can Settle Suit Over Radioactive Waste Cleanup (Update1)

May 20, 2010, 1:42 PM EDT

By Tiffany Kary


May 20 (Bloomberg) -- Tronox Inc., a bankrupt chemical maker, won permission to settle a lawsuit with the U.S. government over a cleanup of radioactive material in residential areas and a sewage treatment plant in West Chicago, Illinois.


U.S. Bankruptcy Judge Allan Gropper in New York today approved the agreement, under which the U.S. will release $25 million to reimburse Tronox for cleanup work done before 2009, and Tronox will do more of the work without guarantees of future government help. The settlement ends a dispute about the scope of the cleanup and Tronox’s right to reimbursement from the U.S. Energy Department.


The settlement is a building block to an overall resolution of its environmental liabilities, and directs more funds to “high priority work while simultaneously freeing other consideration to be allocated to sites elsewhere in the United States,” Tronox said in court documents. The settlement supplements the $115 million Tronox plans to set aside for other environmental costs as it reorganizes under Chapter 11.


“I hope this is a good sign for future progress,” Gropper said, approving the settlement after hearing there were no objections.


Four Sites


Today’s settlement covers cleanups at four sites in Illinois: residential areas in the City of West Chicago and DuPage County; Reed-Keppler Park in West Chicago; a sewage treatment plant in West Chicago and DuPage County; and Kress Creek and the West Branch DuPage River.


The contamination stems from a site that produced thorium, radium and uranium for use in gas lights and the U.S.’s atomic energy program from 1932 to 1973, leaving behind radioactive mill tailings.


“Before the health risks associated with radioactive materials were recognized, these mill tailings were available for use as free fill material by residents and contractors in the West Chicago area. Accordingly, the soil at many properties in the West Chicago area became contaminated with radioactive materials,” lawyers for Tronox wrote.


Kerr-McGee Corp., Tronox’s predecessor company, operated the site from 1967 to 1973.


Tronox, the third-largest maker of whitening pigment, also makes chemicals for paints, coatings, plastics, paper, batteries, toothpaste, sunscreen and shampoo. It’s been disputing environmental liabilities at sites including Henderson, Nevada, where the state water authority says toxic chemicals are leaking into the soil and groundwater.


Responsibility Disputed


The Oklahoma City-based company has disputed its responsibility for many sites, including over 600 mining-related sites and 270 chemical labs. It sued Anadarko Petroleum Corp. and Kerr-McGee in May 2009, saying those companies’ 2006 spinoff of Tronox saddled it with $550 million in environmental liabilities.


Under the Energy Policy Act of 1992, the Energy Department provides reimbursement of remediation costs incurred at specific sites that were used at least in part to supply thorium and uranium to the U.S. When Tronox filed for bankruptcy, the U.S. filed a proof of claim for environmental cleanup costs and civil penalties for pollution around the U.S., and said it had a right to offset its reimbursement to Tronox against its alleged claims.


The bankruptcy case is Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).



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