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WASHINGTON, D.C. - In the largest judgment after trial in the history of the federal Superfund law, the Justice Department and the Environmental Protection Agency announced that the District Court of Montana has ordered W.R. Grace & Co. to pay over $54.5 million to reimburse the federal government for the costs of investigation and cleanup of asbestos contamination in Libby, Montana.

In the ruling issued by Judge Donald W. Molloy of the District Court of Montana, the court said W.R. Grace was liable for costs related to the investigation and cleanup of asbestos contamination in Libby and ruled that the Environmental Protection Agency's revised method for calculating indirect, or overhead, costs is appropriate and that those costs may be recovered from W.R. Grace. This is the first time a federal district court has ruled on EPA's revised method for calculating overhead costs.

"Today's ruling is a victory for the environment and the American taxpayers," said Thomas L. Sansonetti, Assistant Attorney General of the Department of Justice Environment and Natural Resources Division. "From the very the 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."

W.R. Grace owned and operated a vermiculite mine and vermiculite processing facilities in Libby from 1963 to 1990. The vermiculite ore found in Libby is contaminated with asbestos fibers. Mining and processing activities resulted in the spread of vermiculite – and the associated asbestos fibers – to numerous homes, businesses, and schools throughout the town.

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

Hundreds of people in Libby, including former mine workers, their families, and other residents, have exhibited signs and symptoms of asbestos-related disease. The federal Agency for Toxic Substances and Disease Registry conducted medical testing for Libby residents in the summer of 2000, and observed pleural abnormalities in 18% of the people who participated. ATSDR also found that mortality in Libby from asbestosis was 40 to 80 times higher than expected, and mortality from lung cancer was 20% to 30% higher than expected.

The U.S. Environmental Protection Agency has been removing asbestos-contaminated soils and vermiculite 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 Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the "Superfund" law. In December 2002, Judge Molloy rejected W.R. Grace’s challenges to EPA’s actions in Libby, ruling that EPA’s cleanup decisions were reasonable.

A three-day trial on the remaining issues in the case – including the adequacy of documentation of ATSDR’s Libby-related costs and the recoverability of EPA’s overhead costs – was conducted in January 2003 and is the subject of yesterday’s ruling. The ruling means that W.R. Grace must pay all of the $54.5 million in costs that the EPA incurred through December 31, 2001. Costs incurred after that date will be resolved in future proceedings if disputed by W.R. Grace.

"Through efficient and aggressive enforcement, EPA made sure W.R. Grace was held liable for the harm the company did to hundreds of families and homes," said John Peter Suarez, the Assistant Administrator for EPA's Office of Enforcement and Compliance Assurance. "We made sure that the responsible party, W.R. Grace, not the taxpayer, has to pay for the clean-up of asbestos contamination. This is a great example of smart enforcement on behalf of EPA."

"Libby is distinctive among Superfund sites because of the high toll that the exposure to asbestos has taken on the people in this community," says Dr. Henry Falk, Assistant Administrator of ATSDR. "This judgment underscores the importance of our work with the Libby community and the efforts that our agency has devoted to address health concerns there."

"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, Assistant Regional Administrator for Enforcement at the Environmental Protection Agency.

The Libby cleanup also was the subject of an earlier lawsuit between the federal government and W.R. Grace as a result of the company’s refusal to provide EPA with access to property that it owned or controlled near Libby. EPA needed to conduct cleanup activities on this property and filed suit in October 2000 alleging that W.R. Grace’s refusal to provide access was unlawful and requesting the imposition of civil penalties. In March 2001, Judge Molloy ordered W.R. Grace to provide EPA with access to its properties in Libby. In a related settlement, W.R. Grace agreed to a civil penalty claim of $71,000 and to spend $2.75 million to create a fund to provide additional health care for Libby residents with asbestos-related diseases.

In April 2001, W.R. Grace filed for bankruptcy in federal court in Delaware. Any payments on yesterday’s judgment must be approved by the bankruptcy court.