The state of New Jersey sued W.R. Grace & Co. and two of its former executives yesterday, alleging that the Columbia-based chemical maker lied about asbestos contamination at an industrial plant that processed vermiculite ore for about 47 years.
In addition to seeking potentially millions of dollars in civil damages, New Jersey officials hinted that they are exploring other legal options, including criminal charges against the company and the former executives for alleged false claims to state environmental officials.
The moves could further complicate Grace's bankruptcy reorganization and cloud the prospect that proposed federal legislation to resolve millions of asbestos claims could rid the company of many of its financial liabilities.
It also adds to the legal trouble for the company and several current and former executives who are under federal indictment on charges of knowingly exposing residents of Libby, Mont., to levels of asbestos that sickened at least 1,200 of them.
"This is part of a comprehensive investigation that's looking into potential criminal liability of the company and certain executives for willful concealment of the environmental hazard at the Hamilton [Township] facility, which has now placed in jeopardy the health of the community," said New Jersey Attorney General Peter C. Harvey.
A Grace spokesman did not respond yesterday to telephone messages seeking comment.
The lawsuit says Grace officials falsely told the New Jersey Department of Environmental Protection in 1995 that contamination at its Hamilton Township plant had been cleaned up, leaving trace amounts of asbestos in soil in and around the site.
State and federal environmental protection officials found later that at least 15,000 tons of contaminated soil remained at the site when Grace closed the plant in the early 1990s, the suit contends.
The plant processed several hundred thousand tons of vermiculite ore shipped primarily from Grace's mine in Libby beginning in 1948. The ore was used to make fire-retardant insulation, material used in lightweight concrete and fertilizer. The production process produced waste that contained a dangerous form of asbestos, which causes lung cancer and other lung diseases when inhaled.
The executives who made the environmental declarations are Jay H. Burrill, Grace's former environmental coordinator, and Robert J. Bettacchi, who was a vice president also named in the Montana indictment handed down in February. Based on their claims that the site was clean, the state required no further environmental testing at the plant, Harvey said.
Harvey said the lawsuit seeks damages under two statutes that could push fines as high as $300,000 for each day that the company failed to correct the false statements, a period of about 10 years.
New Jersey officials have asked the Environmental Protection Agency and other federal authorities investigating Grace to share information. "We're looking to coordinate our activities with EPA," Harvey said.
Discovered in 1999
The contamination at Hamilton wasn't discovered until 1999, when the EPA began examining 200 sites that had processed vermiculite. Among those scrutinized was a Beltsville plant that processed product from Libby until the early 1990s. Federal investigators determined in 2003 that the former Maryland plant was largely free of asbestos and didn't pose any danger.
Mark Taylor, an attorney and asbestos bankruptcy expert with Arent Fox in Washington, said a large fine and potential criminal charges could delay Grace's bankruptcy reorganization, depending on how big the fines are and how they are characterized by the court.
"It's a big company, and it may have the revenues that they could pay this," he said.
Grace is among dozens of former asbestos companies operating in bankruptcy that stand to benefit from proposed federal legislation. In its current form, the bill would create a $140 billion trust fund to pay thousands of claims filed by people who say they were harmed by exposure to asbestos products. The bill is scheduled for debate in the full Senate in coming weeks but faces challenges from lawmakers and trial lawyers opposed to key provisions.
Benefit to W.R. Grace
If it passes, the legislation could remove a major obstacle to Grace's financial recovery by sharply reducing its asbestos liability. But Taylor and other asbestos bankruptcy experts point out that Grace still would face potentially huge fines and penalties related to the cases in New Jersey and Montana, as well as any other potential criminal or civil actions related to other sites under investigation.
"This would be completely separate," Taylor said, referring to the New Jersey civil suit and pending criminal charges.