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W.R. Grace and Executives, Charged with Endangering Libby, Montana Community, Fraud, and Obstruction of Justice

Release Date: 02/07/2005
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(Washington, D.C. – 02/07/05) The United States Department of Justice and the Environmental Protection Agency announced today that a federal grand jury in the District of Montana has indicted W.R. Grace and seven current and former Grace executives for knowingly endangering residents of Libby, Montana, and concealing information about the health effects of its asbestos mining operations.

According to the Indictment, W.R. Grace and its executives, as far back as the 1970’s, attempted to hide the fact that toxic asbestos was present in vermiculite products at the company’s Libby, Montana plant. The grand jury charged the defendants with conspiring to conceal information about the hazardous nature of the company’s asbestos contaminated vermiculite products, obstructing the government’s clean-up efforts, and wire fraud. To date, according to the indictment, approximately 1,200 residents of Libby have been identified as suffering from some kind of asbestos-related abnormality.

"This criminal indictment is intended to send a clear message: we will pursue corporations and senior managers who knowingly disregard environmental laws and jeopardize the health and welfare of the workers and the public," said Thomas V. Skinner, EPA's acting Assistant Administrator for Enforcement and Compliance Assurance.

“We will not tolerate criminal conduct that is detrimental to the environment and human health,” stated Thomas L. 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.”

William W. Mercer, United States Attorney for the District of Montana, and Lori Hanson, Special Agent-in-Charge, Criminal Investigation Division, Environmental Protection Agency (EPA), Denver, Colorado, announced the unsealing of the 10-count indictment today in United States District Court in Missoula, Montana. In addition to W.R. Grace, the indictment names as defendants Alan Stringer, Henry Eschenbach, Jack Wolter, William McCaig, Robert Bettacchi, O. Mario Favorito, and Robert Walsh, all current or former employees of W.R. Grace. The defendants will be arraigned before United States Magistrate Judge Leif B. Erickson at the U.S. Courthouse in Missoula, Montana.

According to the indictment, W.R. Grace operated a vermiculite mine in Libby, Montana from 1963 to 1990, as part of its Construction Products Division, which was headquartered in Cambridge, Massachusetts. Vermiculite was used in many common commercial products, including attic insulation, fireproofing materials, masonry fill, and as an additive to potting soils and fertilizers.

The vermiculite deposits in Libby were contaminated with a form of asbestos called tremolite. 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 the defendants, beginning in the late 1970's, 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. The indictment further alleges that, 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 EPA, the indictment alleges that W.R. Grace and its officials also obstructed the National Institute of Occupational Safety and Health (NIOSH) when it attempted to study the health conditions at the Libby mine in the 1980's.

The indictment further alleges that, despite their knowledge gained from internal studies, W.R. Grace and its officials distributed asbestos-contaminated vermiculite and permitted it to be distributed throughout the Libby community. This occurred in numerous ways, including, allowing workers to leave the mine site covered in asbestos dust, allowing residents to take waste vermiculite for use in their gardens and distributing vermiculite "tailings" to the Libby schools for use as foundations for running tracks and an outdoor ice skating rink. After W.R. Grace closed the Libby mine in 1990, it 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, Montana. 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 EPA, and as of 2001, EPA had incurred approximately $55 million in cleanup costs.

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. W.R. Grace also could be ordered to pay restitution to victims.

The case is being prosecuted by Assistant United States Attorney Kris A. McLean and Trial Attorney Kevin M. Cassidy of the Justice Department's Environmental Crimes Section. The case was investigated by the United States Environmental Protection Agency's Criminal Investigations Division, with assistance from EPA's National Enforcement Investigations Center and the United States Internal Revenue Service's Criminal Investigation Division.