By Pete Williams Justice correspondent
NBC News
updated 2/7/2005 7:33:13 PM ET 2005-02-08T00:33:13

For nearly 30 years, the town of Libby, in northwest Montana, produced tons of a mineral used to make insulation.

But on Monday, federal prosecutors said the company that mined it, W.R. Grace, intentionally decided against warning its employees and the townspeople that the mineral produced at the time was contaminated with an especially dangerous form of asbestos, even when people in Libby began coming down with an uncommonly large number of lung diseases.

"They, we allege, knowingly endangered people in the Libby community by failing to make disclosures," says U.S. attorney William Mercer.

In court documents, prosecutors say the rate of deaths from asbestos lung disease in Libby is 40- to 80-times higher than the national average. Deaths from lung cancer are 30 percent higher. And the government says 1,200 of the town's 8,000 residents have scarring in the tissues around the lungs — all from asbestos exposure.

The contaminated material was everywhere, even used to surface the town's school running tracks.

But prosecutors say W.R. Grace never warned the schools and even decided that telling miners to shower before going home would only cause fear in the community.

In a brief written statement, W.R. Grace denies the allegations and says it has always taken seriously the well-being of Libby and its employees.

The company has filed for bankruptcy over a slew of asbestos lawsuits.

W.R. Grace has been in legal trouble before. Its failure to disclose water pollution in Massachusetts was dramatized in the movie "A Civil Action."

Prosecutors also accuse seven of the company's current and former executives of being in on the deception — charges that carry a maximum of 70 years in prison.

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