CHARGES AND ELEMENTS by Nick Lofing
The United States government has charged defendants W.R. Grace, Inc., Alan Stringer (now deceased), Henry Eschenbach, Jack Wolter, William McCaig, Robert Bettacchi, O. Mario Favorito, and Robert Walsh with crimes of conspiracy, Clean Air Act violations, and obstruction of justice. The superseding indictment describes the charged crimes, which include one count of conspiracy, three counts of knowing endangerment under the Clean Air Act, and four counts of obstruction of justice. The government filed the superseding indictment two weeks after the district court dismissed the knowing endangerment object of the conspiracy charge in the initial indictment as time-barred. See Docket . The defendants have pleaded not guilty to the charges and are presumed innocent until proven guilty beyond a reasonable doubt.
B. COUNT I: DUAL-OBJECT CONSPIRACY
1. The Government Charged the Defendants with Conspiracy. A conspiracy is a kind of criminal partnership—an agreement of two or more persons to commit one or more crimes. The agreement does not have to be formal or agreed upon in every detail; however, there must be a common plan between or among conspirators to commit the unlawful acts. The essence of a conspiracy is the agreement to commit a crime, plus an act, legal or illegal, in furtherance of that agreement. A defendant can be guilty of conspiracy regardless of whether the crime agreed upon was actually committed. Here, the government charges defendants with a conspiracy that began in 1976 and continued until 2002, where the defendants knowingly combined, conspired, and agreed among themselves 1) to knowingly release asbestos, a hazardous air pollutant, into the air, thereby placing persons in imminent danger of death or serious bodily injury in violation of 42 U.S.C. § 7413(c)(5)(A), and 2) to defraud the United States government, namely the Environmental Protection Agency (EPA) and the National Institute for Occupational Safety and Health (NIOSH), by impairing, impeding, and frustrating agency investigations and clean-up operations in violation of 18 U.S.C. § 371. The EPA and NIOSH are the federal agencies responsible for administering environmental and health laws and regulations. The government alleges that the defendants’ purposes by agreeing to this conspiracy were to increase corporation profits and avoid liability. 2. The Elements of a Dual-Object Conspiracy.
The government has the burden of proving all the elements of conspiracy beyond a reasonable doubt. The government’s proposed jury instruction on the elements of this dual-object conspiracy includes the following three elements:
- The government must show that beginning on or about 1976, and ending on or about 2002, two or more defendants agreed 1) to knowingly release and cause to be released asbestos into the ambient air and knowingly place persons in imminent danger of death or serious bodily injury and 2) to defraud the United States by impairing, impeding, or frustrating governmental functions by deceitful and dishonest means;
- that the defendant under consideration became a member of the conspiracy knowing of at least one of its objects and intending to help accomplish it; and
- that one of the members of the conspiracy performed at least one overt act on or after November, 3, 1999 for the purpose of carrying out the conspiracy. All the jurors must agree on the particular overt act committed.
(The defendants’ propose an additional fourth element: that the government must show beyond a reasonable doubt that “the defendant acted with the intent to defraud, namely, with the intent to deceive or cheat.” See the Defense Case page for the defenses’ factual and legal theories, differences in definitions and interpretation, and other general and affirmative defenses.)
3. Additional Principles of Law Regarding a Charge of Conspiracy.
A person or corporation joins a conspiracy by willfully participating in the unlawful plan with the intent to advance the object of the conspiracy. If a person or corporation does not know about the conspiracy agreement, the person or corporation is not a conspirator. Similarly, mere knowledge that a conspiracy exists, without an agreement to join, does not cause a person or corporation to be a conspirator.
An overt act does not have to be unlawful. The overt act may be a lawful act done with the purpose to carry out the conspiracy. Each conspirator does not have to partake in the overt act to be held responsible. Once a person has agreed to the conspiracy, that person is responsible for the acts of all the other conspirators, even if the person does not know what the other conspirators did or said. It is not a defense that a person’s participation in a conspiracy was minor or for a short period of time. A person can join a conspiracy at a time later than the original agreement and without full knowledge of the entire unlawful scheme and the identities of all the other co-conspirators. However, the defendant must agree with one or more conspirators, know those conspirators are involved with other conspirators, and believe the conspiracy benefits depend upon the success of the entire venture.
4. Corporate Defendants, such as W.R. Grace, Can Commit Conspiracy.
A corporate defendant, such as W.R. Grace, can be charged and convicted of a crime, just as would an individual defendant. Because a corporation is a legal entity that must act through its directors, officers, employees and other agents, the government must prove that the corporation, through its agents, committed every element of the conspiracy beyond a reasonable doubt.
A corporate defendant is different from an individual defendant in two important ways. First, the government must prove that the corporate defendant’s agents committed the offense within the course and scope of their employment. An act is within the course and scope of employment if it directly relates to the general duties assigned to the agent. Though a corporate defendant does not have to formally affirm the acts of its agents, a corporate defendant is not responsible 1) for acts it forbade its agents to commit or 2) for acts it tried, in good faith, to prevent. Second, the government must prove that the corporation’s agents committed the offense with the intent to benefit the corporate defendant.
5. Manner and Means of the Charged Conspiracy: the Overt Acts.
Pages 16 through 43 of the superseding indictment describe the manner and means of the conspiracy. The government charges the defendants with obtaining and concealing knowledge of the hazardous nature of tremolite-asbestos-contaminated vermiculite and its propensity to release fibers into the air. Defendants are further charged with affirmatively asserting that the Libby operations posed no risks to the public health and environment. The government charges that defendants marketed the contaminated vermiculite, provided it to the community of Libby, sold and leased properties contaminated by it, and caused employees to leave the Libby mine with asbestos fibers on their clothes, thus endangering employees’ families and communities.
The superseding indictment lists the numerous overt acts committed by the defendants in furtherance of the conspiracy. The government offers these overt acts to establish that defendants knew of and concealed the dangerous effects of their products and operation. The government cites examples of animal studies, epidemiological studies of employees, employee medical screening and examinations, employee medical record reviews, collection and evaluation of a deceased employee’s lung tissue, review of employee death certificates, employee morbidity and mortality studies, employee autopsy reviews, medical and scientific literature reviews, reports from insurance carriers, and worker’s compensation claims to support its charge that the defendants knew of the hazardous nature of the asbestos.
For example, the government describes a toxicology study conducted by Dr. William Smith of Fairleigh Dickinson University, who was hired by Grace. Dr. Smith observed that hamsters exposed to Libby asbestos showed progressive evidence of asbestos-related lung disease, mesothelioma (a cancer caused only by exposure to asbestos), and carcinogenic tumors. Ten hamsters died. The government alleges that W.R. Grace hired a consultant to revise the conclusions in Dr. Smith’s preliminary draft Final Report, and did not allow Dr. Smith to publish his findings.
The government lists other studies to establish the defendants’ knowledge of the hazards, including the Eschenbach Study, Enbionics Review, the Libby Facility Audit Report, the O.M. Scott Employees’ Bloody Pleural Effusions, the Monson Mortality Study, and the NIOSH Study. Another example proffered by the government is a memo from defendant Eschenbach to other defendants stating, “Our major problem is death from respiratory cancer. This is no surprise.”
The government charges defendants with not only knowing that the asbestos from their operations was hazardous, but also with knowing that W.R. Grace’s vermiculite products released tremolite asbestos fibers into the air. The government offers evidence that defendants conducted drop tests, drum transfer tests, attic simulation tests, and a personnel air monitoring surveys to learn that its products and activities associated with its products released high levels of asbestos fibers into the air.
The government charges the defendants with failing to disclose information required by the Toxic Substance Control Act (TSCA) 8(e), submitting EPA reports that withheld relevant information, like the Hamster Study and the Monson/Harvard Mortality study, and falsely stating in its EPA reports that there was “no reason to believe there is any risk associated with the current uses of Libby vermiculite-containing products.” The government also charges W.R. Grace with denying the EPA Superfund Emergency Response Team access to contaminated properties, thereby delaying EPA’s investigation and causing further releases of asbestos fibers into the air. The government also charges defendants with withholding and concealing information in the EPA CERCLA 104(e) Request For Information, as well as providing false and misleading information.
The government charges defendants with spreading the tremolite-contaminated asbestos vermiculite to the community of Libby, Montana. The government’s theory is that defendants failed to provide the Libby employees with a changing and showering facility, which would have reduced take-home dust that endangered families and community members; destroyed a pamphlet providing employees with information about the hazards created by take-home dust; and knew about a study connecting mesothelioma in dogs with asbestos dust brought home on the clothes of asbestos workers.
The government charges defendants with providing Libby mine mill tailings to the Plummer Elementary School for use as a foundation for an ice skating rink, even though the materials contained tremolite asbestos. Similarly, the defendants provided mill tailings to the Libby Public School District for use on the Junior and Senior High School running tracks. Because W.R. Grace had air samples analyzed at the running tracks and learned the air contained surprisingly high asbestos fiber concentrations, W.R. Grace authorized a resurfacing of the tracks. According to the government, the resurfacing used coarse tailings refuse that contained high concentrations of tremolite asbestos.
The government charges the defendants with leasing, selling, and donating contaminated properties to small, local business and groups because W.R. Grace could not sell to bigger corporations, like 3M and Phelps Dodge, who refused to buy the properties because of environmental concerns. For example, W.R. Grace, knowing the property was contaminated with tremolite asbestos and without disclosing such health and environmental hazards, donated the Export Plant property to the city of Libby to be used for organized youth baseball games.
C. COUNTS II-IV: KNOWING ENDANGERMENT IN VIOLATION OF THE CLEAN AIR ACT, 42 U.S.C. § 7413(c)(5).
In counts II through IV (“knowing endangerment counts”), the grand jury indicted defendants with knowingly releasing and causing the release of asbestos into the ambient air, thereby placing another person in imminent danger of death or serious bodily injury. The knowing endangerment counts incorporate the allegations and evidence described in the count I conspiracy charge. In count II, defendant W.R. Grace is charged with knowingly endangering residents of Libby and Lincoln County and Grace employees by providing and distributing asbestos-contaminated vermiculite, thus placing them in imminent danger of death or serious bodily injury. Count III charges defendants W.R. Grace, Wolter, and Bettacchi with knowing endangerment based on the sale of asbestos contaminated real property, the Screening Plant, to the Parker family. Count IV charges the same defendants with knowing endangerment for leasing asbestos contaminated property, the Export Plant, to the Burnetts and for selling the asbestos contaminated property to the City of Libby.
According to the government, for the jury to convict the defendants of the knowing endangerment counts, the government must prove beyond a reasonable doubt:
- The defendants knowingly released or caused a release of asbestos into the ambient air; and
- the defendants knew at the time that the release thereby placed another person in imminent danger of death or serious bodily injury.
The government proposes to prove these offenses with evidence from the defendants’ own admissions, EPA sampling results, and testimony from experts, former W.R. Grace employees, and victims of exposure to the Libby asbestos-contaminated vermiculite. In the government’s trial brief, the government states that it “need not show that the defendants intended to release asbestos, or to endanger anybody. Rather, the Government must show that the defendants intended actions that had a high probability of causing a release of asbestos, and that the defendants knew such a release would place persons in imminent danger of death or serious bodily injury – or that they deliberately avoided learning the truth about the danger.”
The definitions of terms continue to be debated and argued, including such important terms as “knowingly,” “release,” “imminent danger,” and “ambient air.” See Clean Air Act Battles. For example, the government proposes to instruct the jury that an act is done “knowingly” if the defendant is aware of the act and does not act through ignorance, mistake, or accident, even if the defendant does not know the act violates the law. Further, the government proposes that knowledge can be imputed to a defendant if he “deliberately closes his eyes” to something obvious or fails to investigate if he knows facts that “cry out for investigation.” In contrast, the defendants propose a definition of “knowingly” that requires awareness or substantial certainty that such a release causes imminent danger of death or serious bodily injury: “you must only consider the actual awareness or belief possessed by that individual defendant” and “[k]nowledge or awareness possessed by someone else may not be attributed to an individual defendant.”
D. COUNTS V-VIII: OBSTRUCTION OF JUSTICE IN VIOLATION OF 18 U.S.C. §§ 1505 and § 1515(b).
Counts V-VIII indict W.R. Grace for obstruction of justice by corruptly obstructing, impeding, and endeavoring to influence, obstruct, and impede the due and proper administration of the law by providing false and misleading statements to the EPA during its investigation. Count V charges W.R. Grace with falsely informing the EPA that “W.R. GRACE’s vermiculite concentrate contained less than one percent tremolite asbestos and that historical asbestos contamination problems at the Libby mine had been resolved.” Count VI charges W.R. Grace with providing the following false information in response to the EPA’s CERCLA 104(e) Request for Information:
- That W.R. Grace did not provide vermiculite to the general public;
- that W.R. Grace employees did not regularly leave the mine with tremolite dust on their clothing;
- that W.R. Grace only informed EPA that it had provided vermiculite mill coarse tailings for use on the Libby High School running track, when in truth and in fact, W.R. Grace had placed vermiculite mill coarse tailings at the Libby Junior High School running track and at the Plummer Elementary School ice skating rink;
- that W.R. Grace took actions to treat the roadway to the mine to minimize dust created by vehicular traffic, when in truth and in fact, W.R. Grace used vermiculite mill tailings, to construct, surface and sand the roadway; and
- that W.R. Grace failed to inform EPA of air and environmental media sampling studies and results.
Count VII charges W.R. Grace with obstruction of justice by denying the EPA Superfund Emergency Response Team access to the property known as the “Mine Site,” the “Flyway” and the “Bluffs.” Count VIII charges W.R. Grace with falsely stating to the EPA that “Grace’s expanded vermiculite, which was used in ZAI [Zonolite Attic Insulation], poses no risk to human health or the environment;” “…[ZAI] contains biologically insignificant amounts of respirable asbestos fibers;” “…it is reasonable to expect that disturbance of [ZAI] will not result in hazardous levels of airborne asbestos fibers;” and “…there is no credible reason to believe that ZAI has ever caused an asbestos-related disease in anyone who has used in his/her home.”
To convict W.R. Grace of these counts, the government must prove beyond a reasonable doubt:
- That the defendant acted corruptly, meaning that it acted with an improper purpose, personally or by influencing another, including making a false or misleading statement, or withholding, concealing, altering, or destroying a document or other information;
- That the defendant obstructed, impeded or endeavored to influence, obstruct, or impede the due and proper administration of the law; and
- That there was a pending proceeding before a department or agency of the United States.
Element two allows the jury to convict for “endeavoring” to obstruct the investigative proceeding; that is, “the obstruction need not be successful.” 18 U.S.C. § 1505. The “proceeding” referred to in element three includes an administrative investigation, such as an EPA investigation.
To prove its allegations for Counts V-VIII, the government intends to offer testimony from the EPA’s On-Scene Coordinator in Libby and the EPA’s Administrator, to introduce documents and internal business memos demonstrating knowledge of the hazards, and to provide testimony and letters showing that W.R. Grace impeded EPA cleanup by buying back property sold to a third party and denying the EPA access, thus requiring the EPA to find an alternative location to store the contaminated waste.
E. THE ORIGINAL INDICTMENT’S COUNTS FOR WIRE FRAUD IN VIOLATION OF 18 U.S.C. § 371 WERE DISMISSED WITHOUT PREJUDICE.
The government’s original indictment, filed on February 7, 2005, included ten counts. See Docket . The Court dismissed two counts for wire fraud when both the defense and the government moved the Court to dismiss the counts. Defendants first moved the Court to dismiss the wire fraud counts for failure to allege the required element of materiality. See Docket  and . Failure to allege an essential element of a count in an indictment is a fatal flaw. If a Court finds the government failed to allege an essential element, it dismisses the count entirely. The government must then redraft an indictment to include all the elements of the count and resubmit its case to another grand jury. Here, the government chose to move the Court to dismiss the wire fraud counts, which the Court granted. See Docket .
The Defendants moved the Court to dismiss the counts with prejudice, which means the wire fraud allegations could never be raised again. The Court found the defendants’ argument weak and dismissed the counts without prejudice. See Docket .