MONTANA: W.R. GRACE FACES $54 MILLION IN SUPERFUND LIABILITY.

U.S. District Judge Donald Molloy of Montana has ordered W.R. Grace & Co. to pay more than $54.5 million to reimburse the federal government for the cost of investigating and cleanup at a former vermiculite mine in Libby, MT, that turned out to be contaminated with asbestos.

The Justice Department, which argued the case for the Environmental Protection Agency, said the judgment was the largest after trial in the history of the Superfund law, the Comprehensive Environmental Response, Compensation and Liability Act.

The department also said Molloy's ruling was the first to approve EPA's new method of calculating indirect, or overhead, costs.

Judge Molloy also ruled that the Columbia, MD, company is responsible for all appropriate future costs to complete the cleanup. Grace estimated its total liability at about $110 million, payment of which is subject to the outcome of its Chapter 11 bankruptcy proceedings.

The $54.5 million is to cover the government's cost of removing asbestos-contaminated soils and vermiculite in and around the mine, now closed.

Grace said it would take a third-quarter charge of at least $50 million, on top of $61 million it had already set aside after Molloy granted the government partial summary judgment on a number of issues.

The company filed for bankruptcy reorganization in 2001 so it could come up a plan to deal with its asbestos liabilities. Besides the cleanup costs, it has agreed to a settlement agreeing to pay a civil penalty claim and put $2.75 million into a fund to provide additional health care for Libby residents with asbestos-related diseases.

"Today's ruling is a victory for the environment and the American taxpayers," said Thomas L. Sansonetti, assistant attorney general heading the department's Environment and Natural Resources Division.

"From the very beginning of this case, W.R. Grace has refused to accept responsibility for contaminating this small town in northwest Montana with asbestos. Today's ruling rejects every argument made by W.R. Grace and requires them to pay for the cleanup of the contamination that they caused."

"The millions of dollars in litigation fees that W.R. Grace has spent in this misguided effort to escape responsibility for the Libby cleanup would have been much better spent on cleanup or on health care for Libby residents," said Carol Rushin, the EPA'S assistant regional administrator for enforcement.

Vermiculite is a naturally occurring mineral with a variety of uses, including construction, insulation and gardening. The problem at Libby is that the mineral was found to be contaminated with asbestos, and the mine was closed in 1990.

Residents showing injury from the asbestos included not only the miners but also wives and daughters who laundered their dusty clothes.

The discovery at the Libby mine has had political fallout, as well.

In 2000, industry was pushing a bill in Congress that would establish medical criteria for plaintiffs suing to recover for asbestos injury. After Libby plaintiffs and their lawyers pointed out they would be excluded, Sen. Conrad Burns (R-MT) - who was running for reelection - withdrew as a sponsor, and Republican leaders stopped pushing the measure.