In the U.S. Justice Department’s largest environmental enforcement recovery ever, Kerr-McGee Corp. and its parent Anadarko Petroleum Corp. today agreed to pay $5.15 billion to settle charges that they fraudulently tried to duck responsibility to pay for environmental cleanup after decades of contamination.

“Kerr-McGee’s businesses all over this country left significant, lasting environmental damage in their wake,” Deputy Attorney General James Cole said in a written statement. “It tried to shed its responsibility for this environmental damage and stick the United States taxpayers with the huge cleanup bill.”

Between 2002 and 2005, Kerr-McGee—famous in part as the employer of whistleblower Karen Silkwood—split itself up. It created a holding company known as the “new” Kerr-McGee, and transferred its valuable oil and gas exploration assets to it. The new company was bought by Anadarko Petroleum Corp. for $18 billion in 2006.

The rest of the company was spun off to form Tronox Inc., which was stuck with legacy environmental liabilities from decades of uranium mining, processing radioactive thorium, creosote wood treating and manufacturing perchlorate, a component of rocket fuel.

In 2009, Tronox went into bankruptcy, “rendered insolvent and unable to pay its environmental and other liabilities,” according to DOJ.

“The company tried to keep its rewards and shed its responsibilities by playing a corporate shell game, putting its profitable oil-and-gas business in a new entity and leaving behind a bankrupt shell holding the environmental liabilities of the defunct, polluting lines of business,” Preet Bharara, U.S. Attorney for the Southern District of New York, said in a statement.

The United States and the bankruptcy estate sued, seeking to force Anadarko and the new Kerr-McGee to repay the value of the assets fraudulently conveyed from the original Kerr-McGee.

In December, U.S. Bankruptcy Judge Allan Gropper in Manhattan ruled that Kerr-McGee’s spin-off of Tronox Inc. was a fraudulent conveyance intended to shield Kerr-McGee from environmental liability. According to affiliate publication The AmLaw Litigation Daily, the ruling was “a slam-dunk win for attorneys at Kirkland & Ellis and Irell & Manella, who squared off against Anadarko’s defense lawyers at Bingham McCutchen and Weil Gotshal & Manges.”

In the settlement announced today, $4.4 billion will go to fund environmental clean-up and for environmental claims.

In a statement, Anadarko CEO Al Walker said the settlement “eliminates the uncertainty this dispute has created, and the proceeds will fund the remediation and cleanup of the legacy environmental liabilities and tort claims,” he said. “Investor focus can now return to the tremendous value embedded in Anadarko’s asset base.”

The settlement agreement will be lodged with the U.S. Bankruptcy Court for the Southern District of New York.

Contact Jenna Greene at On Twitter: @JGreeneJenna.