Judge Approves W.R. Grace’s $250M Cleanup for Montana Asbestos

June 4, 2008

A federal bankruptcy judge has approved an agreement for W.R. Grace & Co. to reimburse the federal government $250 million for the investigation and cleanup of asbestos contamination in a Montana town.

The Columbia, Maryland-based chemical maker agreed to the amount in March to settle a bankruptcy claim brought by the government to recover money for the past and future cleanup of contaminated schools, homes and businesses in Libby, Mont.

The contamination has been blamed for sickening hundreds of people, some of whom have died.

According to an order signed by U.S. Bankruptcy Judge Judith K. Fitzgerald during a hearing in Pittsburgh, Grace must pay the amount within 30 days.

The settlement would be the largest-ever reimbursement through the government’s Superfund program, the U.S. Environmental Protection Agency and the Justice Department have said.

James D. Freeman, a Justice Department attorney, said the settlement was a “substantial compromise” for the government, but the prompt payment would allow the cleanup to continue without budgetary concerns.

Taxpayers have been footing the bill for the EPA’s investigative work and cleanup in Libby, which began in 1999. An EPA official in Libby said in March that expenses totaled $168 million and another $175 million in costs were likely.

The asbestos came from vermiculite mine and processing facilities a few miles from the town in northwestern Montana. The facilities were owned and operated by Grace from 1963 until the site’s closure in 1990.

Millions of tons of the asbestos-contaminated vermiculite ore were shipped from the mine near Libby to about 270 processing plants across the United States for use in insulation, fireproofing, gardening and other products.

Exposure in Libby has been blamed for lung-scarring asbestosis and mesothelioma, a fast-moving cancer that attacks the lungs.

The EPA has said the remaining cleanup work in Libby is likely to take three to five years.

Grace sought Chapter 11 bankruptcy protection in April 2001 because of lawsuits over asbestos.

In 2001, the government filed a lawsuit to recover costs. Two years later, the EPA won a $54 million judgment for cleanup costs incurred through Dec. 31, 2001. But that amount went unpaid amid Grace’s bankruptcy proceedings. The settlement announced in March included the 2003 judgment.

In April, Grace reached an agreement to resolve current and future asbestos claims in a deal valued by plaintiffs’ attorneys at $3 billion in cash and equity.

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