September 2008, the EPA filed suit against Tronox, a leading producer of titanium oxide (used for white pigment) for environmental violations they didn’t commit. And the EPA agrees they didn’t as well.

Why does Tronx claim they never owned the property?

In 1964, Kerr-McGee purchased a company that held assets once belonging to the company that operated the wood treatment plant, according to the suit. The lawsuit claims that Kerr-McGee, before it was purchased by Anadarko Petroleum in 2005, transferred ownership to Tronox and spun off the local chemical company into an independent business.

The EPA claims Tronox, as successor to the former owner and operator, now must reimburse the government at least $280 million for the extensive clean-up of the land. The EPA relocated some residents from the site and has removed 451,000 tons of contaminated soil from the site.

Tronox didn’t pollute the land and the EPA isn’t asserting that they did. However, since Tronox now owns the land, they get the punishment.

Fast forward to today and Tronox is bankrupt and is stuck with the $280 million clean up tab.

Via EPA press release:

he U.S. Environmental Protection Agency (EPA), the U.S. Justice Department and the United States Attorney for the Southern District of New York today announced that Tronox Incorporated has agreed to resolve its environmental liabilities for $270 million and 88 percent of Tronox’s interest in a pending litigation. The bankruptcy settlement will reimburse EPA for past cleanup costs and fund future cleanups at contaminated sites across the country.

Tronox and 14 of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Jan. 12, 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 the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, commonly known as Superfund) 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.

Under the terms of the settlement, Tronox will pay $270 million in cash. The majority of the funding will be placed in five environmental response trusts for the cleanup of numerous 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 United States has one of the highest corporate tax rates, coupled with some of the most draconian regulations in the world . After an episode like this, what company would want to invest in or expand in America? Purchase a company or a string of properties and if you don’t cross a ‘T’ or dot an ‘I’ your organization could spend two years in court, saddled with a crushing fine and forced into bankruptcy.

Who would want to take the risk.