Magazine article Risk Management

Grace under Fire

Magazine article Risk Management

Grace under Fire

Article excerpt

In 1881, goldminers discovered vermiculite in the soil of Libby, Montana. Researchers determined that the material's properties made it suitable for use in insulation, fireproofing and soil conditioning, and by the 1920s, the vermiculite was being actively mined and processed under the commercial name Zonolite. Zonolite came to be used in everything from construction to school craft projects, and over the next 70 years, the Libby mine produced an estimated 80% of the world's vermiculite and employed more than 1,900 people.

As the years passed, however, reports of high rates of serious illnesses and fatalities among Libby residents began to surface. It was soon discovered that the vermiculite deposit was contaminated with asbestos. In 1999, an evaluation by the Agency for Toxic Substances and Disease Registry found that from 1979-1998, mortality from asbestosis in Libby was 60 times higher than the rest of the United States. For W.R. Grace & Company, which owned and operated the mine from 1963 until its closure in 1990, the report signaled the beginning of a contentious battle.

W.R. Grace's legal bill for the Libby contamination has been enormous. More than 250,000 asbestos-related lawsuits have been filed against the company since the late-1990s--the sheer volume of which caused the company to file for bankruptcy in 2001. This year, the company agreed to pay $1.8 billion to settle outstanding claims. According to the plan, W.R. Grace would immediately pay $250 million into a trust for victims. In 2019, the company will pay $110 million into the trust annually for five years, followed by $100 million per year for the following 10 years. Plaintiffs would also have the opportunity to buy 10 million shares of W.R. Grace stock at a discounted price after the company completes its bankruptcy reorganization. In a separate decision, the company was also ordered to pay $250 million towards federal cleanup efforts in Libby--the largest Superfund fine ever levied.

Critics have little sympathy for W.R. Grace, however. Various reports, including the 2004 documentary Libby, Montana, allege that the company knew about the contamination almost immediately after purchasing the mine. …

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