High Court Rejects W.R. Grace Asbestos-Related Criminal Charges Appeal

The U.S. Supreme Court Monday refused to hear an appeal by W.R. Grace & Co. in a case that involves criminal charges brought by the government against the company and six of its executives for Clean Air Act violations in the release of asbestos from a vermiculite mine in Libby, Mont., which Grace operated from 1963 to 1990. Its vermiculite--which was found to be contaminated with amphibole asbestos or "tremolite"--was used as attic insulation, as an ingredient in masonry fill, and as an addictive in potting soils and fertilizers. Grace has been charged with allowing mine employees to take the vermiculite concentrate home and allowing vermiculite materials to be used in running tracks at Libby schools and for the base of an outdoor skating rink. The company also allegedly allowed various production plants and properties to be sold or leased for commercial operations and homes, as well as for use by youth sports organizations, without disclosing the nature or extent of the asbestos contamination.

In 2005, the U.S. Department of Justice's environmental crimes division filed criminal charges against the company, claiming that 1,200 residents of Libby "have been identified as having asbestos related pleural abnormalities as a result of having been exposed to tremolite asbestos produced by W.R. Grace at the Libby Mine." Pleural fibrosis can result in impaired functioning of the lungs, and in more severe cases, disability and death. The division also claimed that more than 20 cases of mesothelioma (an aggressive and fatal form of cancer) had been identified in a town of only 8,000 people. The defendants were charged with knowingly combining, conspiring, and agreeing among themselves and others to release asbestos into the air, defrauding the U.S. government and agencies responsible for administering laws to protect public health and safety, and conspiring "to conceal and misrepresent the hazardous nature of the tremolite asbestos contaminated vermiculite, thereby enriching defendants and others."

In April 2001, Grace filed for bankruptcy. In August 2003, the District Court of Montana ordered the company to pay more than $54.5 million to reimburse the government for the costs of the investigation and cleanup of asbestos contamination. A federal grand jury also issued an indictment against the company in 2005. A federal judge narrowed the scope of the case in 2006.

In its appeal to the Supreme Court, Grace argued that a Ninth Circuit Court of Appeals ruling had wrongly broadened the criminal reach of the Clean Air Laws. The U.S. Solicitor General urged denial of the appeal, arguing that the case has yet to go to trial, and yesterday the court agreed. The Supreme Court also rejected a separate appeal by Grace executives who could face prison sentences of up to 15 years each if found guilty. The company could be ordered by a court to pay restitution to its victims.

Thus far, Grace has spent more than $10 million on medical care and prescription drugs for those suffering from asbestos-related illnesses. Montana's Department of Environmental Quality is now seeking comment on a proposed settlement agreement that would give the agency more than $5 million for costs related to the cleanup of asbestos contamination in Libby. The agreement is separate from the recent settlement of claims by the federal government in which Grace will reimburse the federal government for $250 million for past and future cleanup of Libby schools, homes, and businesses.

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