EPA employees were told late Thursday that Bush had nominated Granta Nakayama to lead the Office of Enforcement and Compliance Assurance, according to an EPA memo obtained by The Sun.
The Senate must approve the appointment.
Nakayama, 46, a specialist in environmental law, is a full partner in Kirkland & Ellis LLP.
The law firm is defending Grace against multiple criminal charges alleging that the Columbia-based company and seven of its current or former executives knowingly put their workers and the public in danger through exposure to vermiculite ore contaminated with asbestos from the company's mine in Libby, Mont.
"This is one of the most significant criminal indictments for environmental crime in our history," Lori Hanson, special agent in charge of the EPA's environmental crime section in Denver, said in February after the charges were announced by the Justice Department.
Grace has denied any wrongdoing.
Nakayama's firm is also representing Grace in its bankruptcy, a matter in which the EPA is trying to recover millions of dollars for environmental cleanup.
Nakayama was traveling and could not be reached yesterday.
Brian Pitts, spokesman for the law firm, said: "Nakayama has had no involvement in [Grace's bankruptcy or indictment] during his tenure at Kirkland."
Thomas Skinner, the EPA's acting head of enforcement, said Nakayama would avoid any conflicts.
"Even if he hasn't worked on the Grace projects himself, he will have to recuse himself from Grace and a number of other matters that Kirkland & Ellis have handled over the years," said Skinner.
"I'm very confident that the first thing he's going to do when he walks in that door is to sign a formal recusal letter and to make clear to everyone in the agency that he's to have nothing to do with W.R. Grace or other clients represented by [Kirkland & Ellis] and nobody can talk to him about these matters.
"I guarantee you it will happen," Skinner added.
Kirkland & Ellis' Web sites list page after page of environmental battles fought, often against the EPA, on behalf of companies that use toxic materials and chemicals.
Eleven EPA lawyers and investigators contacted yesterday refused to comment on the record, with most saying that any public comments would be "a career-ender."
However, they said the appearance of a conflict of interest involving EPA's top enforcement official is likely to have a chilling effect on pursuing investigations and actions involving Grace and any other companies represented by Nakayama's firm.
Skinner said he understands the concerns from those in the field, but added, "The agency has procedures for handling these potential conflicts."
A White House spokesman would not comment last night on any questions of conflict of interest, but said Bush has "full confidence in the nominee."
Stephen Johnson, the EPA administrator, wrote the memorandum to staffers informing them of Nakayama's appointment.
"I am confident that Granta's experience will strengthen and enhance the agency's ongoing vigilance in enforcing our nation's environmental laws and regulations," Johnson said in the memo.
Since 1999, the EPA and Grace, a worldwide chemical company, have been at loggerheads over a variety of environmental problems stemming from the company's asbestos-contaminated vermiculite ore from its Montana mine.
Several of the EPA's regional offices continue to work with state officials and other federal agencies to determine how many of hundreds of abandoned sites in more than 40 states where Grace shipped the tainted ore for processing into consumer products remain contaminated and a risk to people living nearby.
While Nakayama was a student in George Mason University School of Law, Kirkland & Ellis led the successful appellate court battle to scuttle the EPA's 10-year effort to ban the mining, importation, use and sale of asbestos and asbestos-containing products.
The EPA introduced the ban in 1989, and two years later the 5th U.S. Circuit Court of Appeals threw it out.
In 1993, Nakayama wrote a 28-page law review article evaluating the court's ruling.
The law student said the court's decision "illustrates the importance of the substantive protection accorded private parties [industry] under the current" EPA statutes.
The United States is one of only a few industrialized nations that have not banned the material.
Sun staff researcher Jean Packard contributed to this article.