Grace and Redemption

W.R. Grace has agreed to pay $250 million to reimburse the government for the cost cleaning up asbestos contamination in Montana, federal officials said. The payout is the largest ever under the Superfund toxic-waste cleanup law.

Prosecutors had filed criminal charges against the specialty chemical maker for contaminating a vermiculite ore mine near Libby, Montana, with asbestos. That, in turn, contaminated schools, homes and businesses.

The company owned and operated the mine and processing facilities near Libby from 1963 to 1990. Vermiculite is a clay that is used commercially in potting soil mixes, certain insulation, and as a packing material.

After a lengthy legal battle — including decisions by Grace and 61 affiliated companies to file for bankruptcy in April 2001 — the company settled and agreed to the reimbursement, the Justice Department and the Environmental Protection Agency said.

The E.P.A. has been removing soil and other contaminated materials from the town since May 2000. The federal government sued the company in 2001 to recover its costs under the Superfund law, which authorizes such suits.

The government also sued a Grace subsidiary, Kootenai Development Corp., because it owned three of the contaminated properties at issue.

In 2003, a federal district court in Montana ordered Grace to pay the E.P.A. $54 million to cover the agency's cleanup costs in Libby. The settlement announced today includes that money, which was never paid because of Grace's bankruptcy.

Grace is required to pay the $250 million within 30 days after the bankruptcy court gives its approval. The money will be used for future cleanup work in Libby.

by Elizabeth Olson