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Sooner than expected, the last major U.S. producer of the chemical that killed thousands in Bhopal, India, 26 years ago –and was nearly released in a 2008 explosion in West Virginia –is ceasing production of the compound.

An announcement Friday by Bayer CropScience, whose plant in Institute, West Virginia, stores 200,000 pounds of methyl isocyante (MIC), coincided with the start of a court hearing in a lawsuit by residents seeking to stop the company from restarting the unit that produces MIC.

The company, a subsidiary of German conglomerate Bayer AG, said in a news release that it will decommission the MIC unit. “The company will move forward immediately with decommissioning of the reconfigured MIC and associated production units,” the company said.

Bayer CropScience said it was planning to start the MIC unit and begin transitional production of the compound, sold in an insecticide known as Temik, but “uncertainty over delays has led the company to the conclusion that a restart of production can no longer be expected in time for the 2011 growing season.”

“This was a very difficult decision, particularly as our employees did everything possible to ensure the operational safety of our newly-constructed MIC unit during the remaining production period”, said Achim Noack, a member of Bayer CropScience’s managing board. “Our business case was based on our ability to supply the market needs beginning in 2011, and with the recent delays, that plan is no longer economically viable.”

Following a 2010 agreement with the U.S. Environmental Protection Agency, Bayer CropScience agreed to phase-out Temik by 2012.

Bayer said it already had reduced risks of an accident. The blast killed two workers, and flying metal came perilously close to breaching an MIC storage tank, board officials said.

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