W.R. Grace Faces Criminal Charges for Asbestos at Libby Mine
Published by MAC on 2005-02-08
The US govenment is taking notorious mining company, WR Grace, to court on criminal charges of knowingly allowing asbestos and vermicultte to damage the health and enviornment associated with its operations in Montana.
This is almost certainly the first time that named directors of an asbestos producer have been accused of criminal - as opposed to civil - negligence (punishable with 15 years impriosnment). It marks one of the few occasions that mining company directors, anywhere, have faced such serious charges.
W.R. Grace Faces Criminal Charges for Asbestos at Libby Mine
Environmental News Service (ENS)
February 8, 2005
Missoula, Montana - 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."
W.R. Grace operated a vermiculite mine in Libby, Montana from 1963 to 1990, when the mine was closed.
Not all vermiculite deposits contain asbestos, but the deposits in Libby were contaminated with a form of asbestos called tremolite.
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.
Workers were allowed to leave the mine site covered in asbestos dust, residents were allowed to take waste vermiculite for use in their gardens and the company 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, 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."
But federal officials are not swayed by these expressions of goodwill. "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 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," 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.
US Asbestos Bill Hits Further Snags, Lawmakers Say
Planet Ark
February 9, 2005
WASHINGTON - A US Senate plan to create a $140 billion asbestos compensation fund has hit further snags over ways to stop victims being paid twice and sagging support among members of the Republican majority, lawmakers said Tuesday.
Senate Majority Leader Bill Frist told reporters the measure would come for a vote "at some point" but other bills would advance while work continued on the plan to take asbestos compensation out of the court system.
Republican Sen. John Cornyn of Texas said the asbestos proposal, as it now stood, had so little Republican support that it might not get out of the Senate Judiciary Committee. "I think we have gotten a little bit off track and we need a reality check," Cornyn told reporters.
Frist said the remaining issues included "subrogation" -- a technical term for offsetting awards from the fund by the amount of compensation paid elsewhere.
Other senators said many Republicans were concerned people injured by asbestos could collect from the compensation fund and get other awards too, such as from a state workers' compensation system.
Republican Sen. Arlen Specter of Pennsylvania, sponsor of the asbestos bill, had said on Monday he had delayed introducing the measure at the request of Frist and several members of the Senate Judiciary Committee.
Frist said on Tuesday that once the Senate finished with a class action overhaul bill now on the chamber floor, bankruptcy reform legislation was expected to follow, and federal budget bills could come after that -- suggesting it could be weeks before asbestos is considered.
Asbestos, a fire-retardant mineral, was once widely used for insulation and construction. Scientists say inhaled fibers are linked to cancer and other diseases. Thousands of injury claims are clogging US courts and bankrupting companies.
Cornyn said insurance companies who pay workers compensation benefits would expect to be reimbursed out of any recovery against a third party, like the asbestos fund. "What this (Specter's draft bill) provides right now is that they can't do that," he said.
But labor representatives have said they will not support a bill that gives insurers such a lien or right of recovery. Cornyn said Republicans were also concerned about a provision in the bill that would give up to $200,000 to smokers with lung cancer who have no evidence of asbestos disease, and provisions that would allow some asbestos claims to continue in court.
W.R. Grace Accused of Hiding Cancer Risk
February 7, 2005
By Bob Anez, Associated Press Writer
Missoula, Mont. - W.R. Grace and Co. and seven high-ranking employees knew a Montana mine was releasing cancer-causing asbestos into the air and tried to hide the danger to workers and townspeople, according to a federal indictment unsealed Monday. More than 1,200 people became ill, and some of them died, prosecutors said.
The asbestos was naturally present in a vermiculite mine operated by Grace in the small town of Libby for nearly 30 years.
The federal grand jury said that top Grace executives and managers kept secret numerous studies spelling out the risk the cancer-causing asbestos posed to its customers, employees and Libby residents.
The indictment also accused Grace and Alan Stringer, former manager of the now-closed mine, of trying to obstruct efforts by the U.S. Environmental Protection Agency to investigate the extent of asbestos contamination in the Libby area beginning in 1999. Additional charges in the indictment include wire fraud and violating the federal Clean Air Act.
"A human and environmental tragedy has occurred in Libby. This prosecution seeks to hold Grace and some of its executives responsible for the misconduct alleged in this indictment," Bill Mercer, the U.S. attorney for Montana, said at a news conference in Missoula.
Lori Hanson, a special agent with the Environmental Protection Agency, called the allegations against Grace and its executives "one of the most significant environmental indictments in our history."
The company, based in Columbia, Md., did not immediately comment Monday on the charges. However, Grace disclosed last October that it was under investigation.
In a statement, Grace said it had not been served with the indictment and couldn't comment at length, but added that it "categorically denies any criminal wrongdoing."
"We are surprised by the government's methods and disappointed by its determination to bring these allegations," the company said. "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."
Grace filed for bankruptcy protection in April 2001 after it was overwhelmed by asbestos-related injury lawsuits.
Asbestos contamination in Libby came to light in 1999 after national news reports first linked the pollution from a nearby vermiculite mine to the deaths and illnesses of area residents. The vermiculite ore was used in a number of household products, most notably a common home insulation. The ore, however, contained naturally occurring tremolite asbestos, a carcinogen.
The EPA began its investigation shortly after news of the asbestos-related deaths became public. Since then, the agency declared the area a Superfund site and has spent more than $55 million on cleanup so far.
Grace has appealed a federal judge's ruling that it must repay the EPA that entire amount for cleanup. That dispute is ongoing.
In addition to the company and Stringer, those named in the indictment are Henry Eschenbach, former health official for a Grace subsidiary; Jack Wolter, a former executive for Grace's construction products division; William McCaig, former general manager of the Libby mine; Robert Bettacchi, a senior vice president of Grace; O. Mario Favorito, chief legal counsel for Grace; and Robert Walsh, former Grace vice president.
The company could face a fine of up to $280 million, twice the amount of after-tax profits the government alleges W.R. Grace realized from the Libby mine, according to the Justice Department.
Stringer could be sentenced to as many as 70 years in prison, while Wolter and Bettacchi face maximum prison terms of 55 years. The other defendants could get 5 years in prison.
Les Skramstad, a Libby resident and former mine worker who was diagnosed with asbestosis nine years ago, said he was pleased criminal charges had finally been filed.
"This wasn't something that happened to us. This was something that was done to us," said Skramstad, who attended Monday's news conference.
Skramstad, 68, said he worked in the mine for 2 1/2 years and believes he not only contracted asbestosis there, but brought home asbestos fibers that also sickened his wife and two children.
All of them now have asbestosis, Skramstad said.
"They should have to pay," Skramstad said of the defendants. "They will never have to pay like we did, because it won't cost them their lives."
The government claims that not only did the defendants keep secret the health dangers posed by the vermiculite mined at Libby, they hampered federal government efforts to protect the public from such risks.
As early as 1976, the company knew of lung health problems among its employees at the mine, according to the indictment.
Grace executives also had reports or studies warning of the dangers of asbestos vermiculite exposure in 1977, 1980, 1981, 1982, the indictment alleged. At one point, it said, Eschenbach responded to one of the studies by writing in a memo: "Our major problem is death from respiratory cancer. This is no surprise."
Despite having that information, the indictment said, Grace officials told the EPA in 1983 that there was no indication their products posed a substantial threat to human health.
The company, knowing of the dangers from its product, provided vermiculite for a junior high school running track and as a base for an ice rink, the indictment said. It said Grace also sold or leased some of its contaminated properties to local residents for homes and businesses, for baseball fields and for city use.
When the EPA arrived in 1999, company officials lied about providing vermiculite insulation to local residents for their homes and businesses and failed to reveal the vermiculite was used on the school's running track, the Justice Department said.
As late as April 2002, in response to the EPA declaring a public health emergency in Libby, the company still insisted its vermiculite was not a risk to the environment and human health, the indictment said.
Grace shares fell 3 cents Monday to close at $11.45 on the New York Stock Exchange. They lost another 45 cents in the extended session.
US Asbestos Bill at Critical Stage - Senator Specter
Planet Ark
March 2, 2005
Washington - A proposal for a $140 billion asbestos compensation fund will be put in the "deep freeze" unless lawmakers soon agree on the details, Senate Judiciary Committee Chairman Arlen Specter warned Tuesday.
Specter, author of the draft bill to take asbestos injury claims out of court and pay them from the fund, said the proposal is at a critical stage and would be removed from his committee's agenda in the next few weeks if feuding continues on the fund's size and other issues.
"Now is the breakpoint," he said in an opinion article published in The Washington Times newspaper. "Prompt compromises will have to be forthcoming if this critical legislation is to become law or relegated to the deep freeze."
Asbestos was widely used for fireproofing and insulation until the 1970s. Scientists say its inhaled fibers are linked to cancer and other diseases.
Specter, a Pennsylvania Republican, has proposed the fund pay hundreds of thousands of asbestos claims, which have forced companies into bankruptcy like Federal-Mogul and W.R. Grace & Co.. The fund would be financed by asbestos defendant companies and insurers.
The effort is part of a broad Republican agenda to revamp the civil justice system. President Bush favors ending what he calls "frivolous asbestos claims," saying many who file suit are not actually sick from asbestos exposure.
But the White House has not explicitly endorsed Specter's proposal, and he has struggled to get members of either party on his committee to embrace it.
Many conservative Republicans, reflecting business concerns, fear Specter's proposal does not provide a final cap on asbestos liability, allowing for example an immediate return to the courts if the fund runs out of money.
Democrats point to organized labor worries that a $140 billion fund may not be big enough, especially early in its life when the volume of claims would likely be greatest.
Specter said Senate Majority Leader Bill Frist had reserved a "window of floor debate" around Easter (March 27) for the bill. The Judiciary Committee is expected to discuss the proposal at a meeting this Thursday.
Specter said the proposals in the draft bill were not "in concrete" and could be changed, but senators needed to act fast if they were serious about making the proposal law.
"The Senate has reached a critical stage where decisions in the next few weeks will result in either compromise or removal of this issue from the Judiciary Committee agenda," he warned.
Specter said he knew the panel would not have time to return to the issue later in the year, "with our crowded calendar and prospective Supreme Court nomination hearings."