FOR IMMEDIATE RELEASE
MONDAY, FEBRUARY 7, 2005
ENRD (202) 514-2007
USAO (406) 542-1899
EPA (202) 564-9828
TDD (202) 514-1888
W.R. GRACE AND EXECUTIVES CHARGED WITH FRAUD, OBSTRUCTION OF JUSTICE, AND ENDANGERING LIBBY, MONTANA COMMUNITY
WASHINGTON, D.C. - The U.S. 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 affects of its asbestos mining operations.
According to the indictment, W.R. Grace and its executives, as far back as the 1970’s, attempted to conceal information about the adverse health effects of the company’s vermiculite mining operations and distribution of vermiculite in the Libby, Montana community. The defendants are also accused of obstructing the government’s cleanup efforts and wire fraud. To date, according to the indictment, approximately 1,200 residents of Libby area have been identified as suffering from some kind of asbestos-related abnormality.
“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 continuing our work with U.S. Attorney Mercer’s office to prosecute this case.”
"A human and environmental tragedy has occurred in Libby,” said William W. Mercer, U.S. Attorney for the District of Montana. “This prosecution seeks to hold Grace and its executives responsible for the misconduct alleged."
U.S. Attorney Mercer announced the unsealing of the 10-count indictment today in U.S. 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 U.S. Magistrate Judge Leif B. Erickson at the U.S. courthouse in Missoula, Montana at a later date.
"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.
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 diseases, 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, up to five years imprisonment on each of the conspiracy and obstruction charges, and 10 years on prison on the wire fraud charge. 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 U.S. Attorney Kris A. McLean and Trial Attorney Kevin M. Cassidy of the Justice Department's Environmental Crimes Section. The case was investigated by the U.S. Environmental Protection Agency's Criminal Investigation Division, with assistance from EPA's National Enforcement Investigations Center and the U.S. Internal Revenue Service's Criminal Investigation Division.
An indictment is merely an accusation and the defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.