Metropolitan Water District of Southern California
Office of the General Counsel
Monthly Activity Report – May 2014
Date of Report: June 2, 2014
Metropolitan Cases
Tronox, Inc. v. Kerr McGee Corp.
(U.S. Bankruptcy Court, Southern
District of New York)
On May 28, 2014, a New York bankruptcy judge
approved the proposed settlement of $5.15 billion
in the Tronox Inc. v. Kerr McGee Corp. adversary
proceeding (Adversary Action). The public
comment period for the settlement closed on
May 21, 2014. The deadline to object to the
settlement was May 15. Several groups filed
objections to the settlement, including the AIG
Parties. The AIG Parties comprised of insurance
companies, asked that the settlement agreement
and any order approving the settlement preserve
the AIG Parties’ right to seek reimbursement from
the settlement proceeds of $257 million disbursed
on behalf of its insureds (including the Nevada
Environmental Response Trust (Trust)). Before
the May 28 hearing, AIG agreed to dismiss its
objection in exchange for a clarification that the
agreement does not affect the rights of the parties.
In response to objections from claimants in
Columbus, Mississippi, the judge pointed out that
many of the claimants had failed to file a claim in
the bankruptcy proceeding and that the settlement
would delay cleanup. Accordingly, the judge will
recommend that the federal district court approve
the settlement. Payment will be made after court
approval of the settlement is final and no longer
appealable, which is expected to be by fall of 2014.
If the settlement is approved, the Trust will receive
approximately $1.1 billion from the settlement,
which will be used to clean up the Tronox site in
Henderson, Nevada. (See December 2013 Activity
Report.)
Matters Involving Metropolitan
Sacramento Regional County Sanitation
District v. Regional Water Quality Control
Board and State Water Resources Control
Board (Sacramento Superior Court)
The Sacramento Regional Sanitation District’s
(“District”) Treatment Plant has long been of
significant concern to Metropolitan due to its
discharge of nutrients, pathogens, and other
constituents into the Delta water supply. In 2010
the Central Valley Regional Board adopted a new
discharge permit calling for a dramatic reduction in
the Plant’s discharge of ammonia and nitrate by
requiring full nitrification/denitrification treatment
and tertiary filtration for pathogen removal. The
Permit was upheld by the State Water Resources
Control Board in 2012.
In 2010 the District filed litigation challenging the
permit. Metropolitan and the other participating
water agencies intervened in the litigation to
defend the permit. Last spring, the parties reached
a partial settlement of the litigation, whereby the
District agreed to dismiss its challenge to the
ammonia and nitrate limits. That left a cause of
action concerning the pathogen and filtration
requirements still to be litigated.
Earlier this year, the District initiated settlement
discussions on the remaining litigation.
The discussions have proved fruitful and a
settlement has been reached. The settlement still
requires filtration, but at a lower hydraulic capacity
than originally required (217 million gallons per day
instead of 325). This means that during some
days during the high flow winter months, a small
portion of the plant flow would not be filtered. On
an annual basis, the amount of plant flow that
would not receive filtration amounts to less than
3 percent. Implementation of the settlement
requires issuance of an amended permit.
On May 27 the Regional Board issued a Tentative
Order to amend the Permit and noticing a public
hearing for consideration of the amendments at its
August 7/8 meeting and it is anticipated that the
amended permit will be issued.
The settlement secures the most favorable terms
of the permit and avoids continued litigation. For
the District, the downsizing saves approximately
$150 million in construction, operations and
maintenance costs. The settlement represents a
major accomplishment and a significant step in
