W.R. Grace Hit With Record Superfund Fine for Libby Asbestos

Asbestos, a recognized human carcinogen, is known to cause lung cancer and mesothelioma, a lethal tumor of the chest and abdominal cavities. Exposure to asbestos also can cause asbestosis, a disease characterized by scarring of the lung.

W.R. Grace owned and operated a vermiculite mine and vermiculite processing facilities in and near Libby from 1963 to 1990. The vermiculite ore was contaminated with asbestos and asbestos-laden vermiculite has been found all over town. It was even used as a running surface for the Libby High School track.

The abandoned vermiculite mine above Libby, Montana (Photo courtesy EPA Region 8)

The asbestos fibers in vermiculite from Libby have been identified by the federal government as the cause of hundreds of deaths and thousands more illnesses.

The vermiculite was shipped to more than 200 processing and packaging plants throughout North America, where it was made into lawn and garden products and attic and wall insulation that the government has estimated is in up to 35 million homes and businesses.

In March 2000, a class-action lawsuit against Grace & Co. was filed on behalf of thousands of Washington state homeowners and business owners whose buildings contain Zonolite insulation. W.R. Grace and 61 affiliated companies filed for bankruptcy in April 2001.

Today's legal action settles a bankruptcy claim brought by the federal government to recover money for past and future costs of cleanup of contaminated schools, homes and businesses in Libby.

Opened in 1913, the mine is in the hills six miles from Libby. Grace bought it in 1963 and closed it in 1990. The EPA has been removing asbestos-contaminated soils and other materials in and near Libby since May 2000.

The federal government filed suit against W.R. Grace in March 2001 to recover its investigation and cleanup costs under the Superfund law. The lawsuit also named Kootenai Development Corporation, a W.R. Grace subsidiary, as a defendant due to its ownership of three contaminated properties in Libby.

In 2003, the federal district court in Montana awarded the EPA over $54 million for cleanup costs incurred by the federal agency through December 31, 2001.

That award has not been paid due to W.R. Grace's bankruptcy. Today's settlement resolves the 2003 judgment as well as continuing cleanup costs EPA has incurred since December 31, 2001 and will incur in the future. The EPA will place the settlement proceeds into a special account within the Superfund that will be used to finance future cleanup work at the site.

The settlement agreement will be lodged in the U.S. Bankruptcy Court for the District of Delaware and is subject to court approval after a 30-day public comment period. The settlement requires W.R. Grace to pay the $250 million within 30 days of bankruptcy court approval.

Vermiculite is a naturally occurring mineral and the world's largest known deposit is in Libby. Before the closing of the mine in 1990, Libby contributed up to 80 percent of the world's supply of vermiculite.

The unique mineral expands when heated. Expanded vermiculite is included in concrete aggregates, loose-fill insulation, horticultural applications like soil conditioning products, and as a bulk carrier for agricultural chemicals.

The federal Agency for Toxic Substances and Disease Registry, ATSDR, in cooperation with the Montana Department of Public Health and Human Services, analyzed mortality statistics for Libby, Montana during the period from 1979 to 1998.

For the 20-year period reviewed, mortality in Libby resulting from asbestosis was approximately 40 to 60 times higher than expected, the ATSDR found. Mesothelioma mortality was also elevated.

In February 2005, W.R. Grace and seven of its current or former executives were indicted on federal charges that they knowingly put their workers and the public in danger through exposure to vermiculite ore contaminated with asbestos from the Libby mine.

The company has attempted to bar federal lawyers from introducing many documents, studies and testimony of expert witnesses into evidence in the criminal trial.

U.S. District Judge Donald Molloy sitting in Montana ruled for the company in 2006. The Ninth Circuit Court of Appeals reversed his ruling, but now W.R. Grace lawyers are in the process of filing an appeal to the U.S. Supreme Court that is due April 14, 2008.

If the high court accepts the case, it would make a final ruling on whether the government can use that evidence at trial.

W.R. Grace has corporate headquarters in Columbia, Maryland and employees in nearly 40 countries. The company manufactures construction chemicals, building materials and chemical additives.

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