US energy company Anadarko Petroleum has agreed to pay $5.15 billion (£3.08 billion) to clean up areas affected by hazardous waste pollution, settling a long-running legal dispute between Kerr-McGee, a chemical and energy company owned by Anadarko, and a trust representing the US government, state governments and thousands of citizens.

The cash will be used to clean up over 2000 sites across the US polluted by nuclear fuel, rocket fuel waste and creosote from various mining and manufacturing plants, and will provide compensation to more than 8000 individuals who claim their exposure to Kerr-McGee’s wood treatment plants in Pennsylvania and New Jersey led to cancer.

Anadarko had argued that the environmental liabilities belonged to Tronox, a paint and chemical company that was sold by Kerr-McGee before the Anadarko takeover in 2006. But the court ruled the sale of Tronox was a fraudulent attempt by Kerr-McGee to shed its environmental responsibilities and make itself a more attractive takeover prospect for Anadarko.

The payout is the largest environmental settlement ever to be enforced in the US, including the 2010 Deepwater Horizon oil spill, over which BP was fined $4 billion.