W.R. Grace must pay EPA cleanup bill

October 11, 2006|By Allison Connolly | Allison Connolly,Sun reporter

Having exhausted its appeals, W.R. Grace & Co. must pay $54.5 million to clean up land and buildings around its former Montana mine that has been linked to hundreds of illnesses and deaths from asbestos-related diseases.

The Supreme Court declined yesterday to consider Grace's appeal of lower-court decisions that sided with the Environmental Protection Agency. The EPA sued Grace in 2001 to recover cleanup costs related to the mine in Libby, Mont., which Grace and its predecessors operated between the 1920s and 1990.

The EPA's costs include cleaning or demolishing contaminated buildings, removing contaminated soil, and providing health screening for Libby residents and former mine workers.

Grace will pay the government with reserve funds the company has set aside, said Greg Euston, a spokesman for the Columbia company. The payment should have no bearing on the company's bankruptcy status or its reorganization plan, he said.

The specialty chemicals company filed for Chapter 11 bankruptcy protection in 2001 in response to a rising number of asbestos-related claims.

As of June 30, Grace estimated its environmental liabilities associated with the Libby mine - including the $54.5 million owed to the EPA - at $255.4 million, according to a filing with the Securities and Exchange Commission.

That price tag will likely grow, the company said, because it does not include the cost of cleaning up the mine itself.

The EPA began investigating reports of health problems among Libby residents and former mine workers in 1999. The government estimates 1,200 of 8,000 local residents have died or become sick from exposure to asbestos-laden dust. The vermiculite mined there also was used in insulation in residents' homes and public buildings.

Criminal charges

Grace and seven current and former executives face criminal charges of covering up the extent of the contamination. Their federal trial was supposed to start last month but was delayed until late next year at the earliest, after prosecutors appealed several pretrial rulings.

Grace doesn't dispute it has a financial obligation to clean up the contamination. However, the company challenged the EPA's method of calculating the cost. Grace argued that those costs are capped at $2 million unless an analysis is conducted before the cleanup starts to ensure it is done cost effectively.

The 9th U.S. Circuit Court of Appeals sided with the EPA, and wrote in its Dec. 1, 2005 decision that an "immediate, aggressive response" was necessary and exempt from any cap.

`Extraordinary'

"The situation confronting the EPA in Libby is truly extraordinary," wrote Judge M. Margaret McKeown. "We cannot escape the fact that people are sick and dying as a result of this continuing exposure."

In August, Solicitor General Paul D. Clement issued a statement endorsing the appeals court's decision and urging the Supreme Court not to hear the case. The EPA referred calls yesterday to the Justice Department, which did not respond to a request for comment.

Grace stock closed up 5 cents yesterday at $12.70.

allison.connolly@baltsun.com

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