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Supreme Court refuses to hear Grace appeal

| October 13, 2006 12:00 AM

By BRENT SHRUM Western News Editor

The U.S. Supreme Court has refused to hear an appeal by W.R. Grace on lower court rulings holding the company liable for asbestos cleanup costs in the Libby area.

In 2003, a federal judge in Missoula sided with the Environmental Protection Agency and ordered Grace to pay $54.5 million for costs incurred through 2001 on cleanup of asbestos contamination associated with the company's defunct vermiculite mine. Grace took the case to the Ninth Circuit Court of Appeals, which upheld the district court's decision. Grace then went to the Supreme Court, which on Tuesday rejected the appeal.

"The decision was good for us," said local EPA project manager Paul Peronard. He added, however, "It doesn't mean there's money in the bank."

The money is "basically going nowhere" until issues involving Grace's bankruptcy can be resolved, Peronard said.

"Even though we have a judgment, we have to go to the bankruptcy court and ask that that be liquidated," he explained.

In addition to the $54.5 million tallied from the start of EPA's involvement in late 1999 through the end of 2001, Grace was held liable by the federal courts for ongoing expenses for the cleanup. The company has a limited ability to contest those costs as calculated by the EPA.

To date, the agency's direct costs for the Libby cleanup are "in the neighborhood of $120 million," Peronard said.

Grace could choose to enter into an out-of-court settlement on the additional cleanup costs, Peronard said. Unlike the court judgment, which is required to be repaid to the federal Superfund budget, such a settlement could earmark funds for specific projects. That could lead to various local, regional and national interests vying for a cut, Peronard said.

"You'll see competing packs of wolves circling around this money," he said.

The EPA may also have to choose whether to go through the bankruptcy court and accept a portion of the money now or wait until Grace's reorganization is complete and receive the full amount, Peronard said. How long that might take is unknown.

"I've got absolutely no idea when and how this company will come out of bankruptcy," Peronard said.