W.R. Grace & Co. has agreed to pay $250 million, the most in the history of the federal government's Superfund program, to clean up contamination from a Montana vermiculite mine that caused 1,200 residents and former mine workers to become ill or die from asbestos-related diseases.
The agreement was announced by the Department of Justice and the Environmental Protection Agency late yesterday. If the deal is approved by the bankruptcy court overseeing Grace's reorganization, the Columbia-based specialty chemicals maker would be shielded from any additional cleanup claims and costs.
The settlement does not affect the criminal case pending in Missoula, Mont., in which the company and several of its former and current executives are accused of covering up the extent of the contamination and obstructing regulators from investigating. That trial was supposed to start in September 2005 but has been delayed by a series of legal appeals of pretrial rulings.
The settlement also does not cover personal injury claims against the company.
"Grace is pleased with the agreement," said spokesman Greg Euston. The company declined to comment further, he said, because the judge overseeing the criminal case has asked the parties not to comment publicly.
Asbestos, a human carcinogen, is known to cause lung cancer and mesothelioma, a lethal tumor of the lining of the chest and abdominal cavities. Vermiculite does not intrinsically contain asbestos, according to the EPA, but it occurred naturally in the deposits in Libby, Mont.
Joan Claybrook, president of the watchdog group Public Citizen, said the asbestos contamination in Libby was one of the worst cases of contaminant exposure ever seen in the United States. Workers carried asbestos-laden dust home from the mines on their clothes. Material from the mine was used in building the high school running track and an elementary school ice skating rink, and to fertilize gardens of Libby residents.
"It spread to every element of the town, and it was all over the place," she said. "You couldn't live in Libby and not be exposed to it."
Claybrook said the impact of the settlement was unclear. "The problem is that it's hard to tell ... exactly what the cleanup involves and whether or not it will deal with the issues that were affecting the families there," Claybrook said. "I don't know if it's a fair settlement or not. It sounds like an awful lot of money. I don't know if it'll do a complete job or people in Libby are happy about that."
Paul Peronard, the EPA's project manager of the Libby site, said the sum should be enough to cover cleanup costs but acknowledges that there is debate among residents over "how clean is clean."
"We think it's a fair and reasonable deal," he said. "We'll make it work."
Grace operated the vermiculite mine and processing facilities in and around Libby between 1963 and 1990. In 2003, the federal district court in Montana awarded the EPA more than $54 million for cleanup costs incurred by the EPA through Dec. 31, 2001. However, it was not paid because Grace was reorganizing in bankruptcy court.
Yesterday's agreement covers the 2003 judgment, cleanup costs since Dec. 31, 2001, and costs in- curred in the future, the government said in a statement.
It is subject to bankruptcy court approval. During a 30-day comment period which began yesterday, a creditor could object and cause the judge to call hearings about whether it should stand.
The EPA will put the cash settlement into a special account within the Superfund to cover past and future costs of cleaning or demolishing buildings, excavating and removing of soil, providing health screenings for Libby residents and former mine workers, and expenses related to the investigation, according to documents Grace filed with the Securities and Exchange Commission late yesterday.
Grace filed for Chapter 11 bankruptcy in 2001 to protect itself from 135,000 asbestos-related claims spanning decades. A U.S. Bankruptcy Court judge in Wilmington, Del., is considering how much it will cost Grace to resolve its lawsuits and exit bankruptcy.
Estimates made by consultants hired by the company and the claimants vary widely, from $382 million to $6.2 billion.
Grace employs 6,500 people in 40 countries. The company's shares closed up $2.19 yesterday at $21.26.
Sun reporter Hanah Cho contributed to this article.