W.R. Grace Faces Criminal Charges for Asbestos at Libby Mine

MISSOULA, Montana, February 8, 2005 (ENS) - W.R. Grace & Co. and seven current and former Grace executives knew that their vermiculite mine in Libby, Montana was emitting carcinogenic asbestos into the air, endangering workers and residents, but they concealed the information, according to a criminal indictment unsealed in federal court Monday. Some 1,200 people have been identified as suffering from illnesses linked to asbestos exposure at Libby.

The U.S. Justice Department and Environmental Protection Agency announced that in addition to W.R. Grace, Alan Stringer, Henry Eschenbach, Jack Wolter, William McCaig, Robert Bettacchi, O. Mario Favorito, and Robert Walsh, all current or former employees of the company are named in the indictment.

They are charged with conspiring to conceal information about the hazardous nature of the company's asbestos contaminated vermiculite products, obstructing the government's cleanup efforts, and wire fraud. The defendants will be arraigned before United States Magistrate Judge Leif Erickson at the federal courthouse in Missoula.

The company said in a statement Monday, “Unfortunately, the government decided to distribute the indictment to the media without providing a copy to Grace. However, based on news reports of the government’s charges, Grace categorically denies any criminal wrongdoing.

“We are surprised by the government’s methods and disappointed by the its determination to bring these allegations. And though court rules prohibit us from commenting on the merits of the government’s charges, we look forward to setting the record straight in a court of law."

The vermiculite mine site in Libby, Montana (Photo courtesy ATSDR)

Vermiculite is used in many common commercial products, including attic insulation, fireproofing materials, masonry fill, and as an additive to potting soils and fertilizers.

Asbestos is regulated under the Clean Air Act as a hazardous air pollutant. Studies have shown that exposure to asbestos can cause life-threatening illnesses, including asbestosis, lung cancer and mesothelioma.

Health studies on residents of the Libby area show increased incidence of many types of asbestos related disease, including a rate of lung cancer that is 30 percent higher than expected when compared with rates in other areas of Montana and the United States.

The indictment alleges that in the late 1970s the executives obtained knowledge of the toxic nature of tremolite asbestos in its vermiculite through internal epidemiological, medical and toxicological studies, as well as through product testing. Despite legal requirements under the Toxic Substances Control Act to turn over to EPA the information they possessed, W.R. Grace and its officials failed to do so on numerous occasions.

In addition to concealing information from the EPA, the indictment alleges that W.R. Grace and its officials also obstructed the National Institute of Occupational Safety and Health when it attempted to study the health conditions at the Libby mine in the 1980s.

They knew the health risks of their asbestos, but, the indictment alleges, W.R. Grace and its officials distributed asbestos-contaminated vermiculite and permitted it to be distributed throughout the Libby community.

Downtown Libby, Montana (Photo courtesy ATSDR)

After W.R. Grace closed the Libby mine in 1990, the indictment alleges that the company sold asbestos contaminated properties to local buyers without disclosing the nature or extent of the contamination. One of the contaminated properties was used as a residence and commercial nursery.

In 1999, EPA responded to reports of asbestos contamination in and around Libby. According to the indictment, W.R. Grace and its officials continued to mislead and obstruct the government by not disclosing, as they were required to do by federal law, the true nature and extent of the asbestos contamination.

Ultimately, the Libby Mine and related W.R. Grace properties were declared a Superfund site by the EPA, and as of 2001, the agency had spent $55 million in cleanup costs.

W.R. Grace says that Vermiculite Mountain was discovered in Libby, Montana in 1913 and commercial mining operations began in 1923. After Grace began to mine the deposits in 1963, the company employed up to 200 people annually at its Libby mine and mill, and at its peak, vermiculite production reached more than 200,000 tons annually.

Beginning in 1982, the company says it initiated an extensive land reclamation project in Libby. After the mine was closed in 1990, Grace says it spent several million dollars to remove and control asbestos-containing dust in compliance with federal and state laws in force at that time.

Grace has implemented health care program to detect and provide medical insurance for anyone in Libby diagnosed with asbestos-related illnesses.

The company has pledged to donate $250,000 a year for as long as necessary to St. John's Lutheran Hospital to provide independent health screening to anyone in Libby who wants it and assure that the hospital has the necessary infrastructure to conduct independent screenings.

“In 2000, we promised to provide St. John’s with funding to help it meet the needs of those in the Libby community with an asbestos-related condition,” said Stringer, Grace’s representative in Libby, who is named as a defendant in the indictment. “Each donation we have made is at work in the community on this important issue," he said in May 2004 as the company made its sixth donation to the hospital.

In its statement Monday, the company said, “As a company and as individuals, we believe that one serious illness or lost life is one too many. That is why we have taken so seriously our commitment to our Libby employees and the people of Libby."

The entire W.R. Grace team is supportive of the citizens of Libby, the company said. "We hope that our continued and dedicated support for their long-term health care, combined with their characteristic strength and determination, will help them through these difficult times.”

An EPA worker tests for the presence of asbestos in a Libby dwellings. (Photo courtesy ATSDR)

"We will not tolerate criminal conduct that is detrimental to the environment and human health," said Thomas Sansonetti, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "We look forward to working with the District of Montana's United States Attorney's Office to prosecute this case."

If convicted, the defendants face up to 15 years imprisonment on each endangerment charge, and up to five years imprisonment on each of the conspiracy and obstruction charges. W.R. Grace could face fines of up to twice the gain associated with its alleged misconduct or twice the losses suffered by victims. According to the indictment, W.R. Grace enjoyed at least $140 million in after-tax profits from its mining operations in Libby. The company also could be ordered to pay restitution to victims.

Grace is a global supplier of catalysts and other products and services to petroleum refiners; catalysts for the manufacture of plastics; silica-based engineered and specialty materials for a wide-range of industrial applications; specialty chemicals, additives and materials for commercial and residential construction; and, sealants and coatings for food packaging. The Libby vermiculite mine was part of the company's Construction Products Division, headquartered in Cambridge, Massachusetts.

With annual sales of approximately $2 billion, Grace has over 6,000 employees and operations in nearly 40 countries.