WASHINGTON

The Supreme Court on Monday rejected an appeal by W.R. Grace & Co. in a criminal case brought by the government over the company's alleged release of asbestos from a Montana mine.

Federal prosecutors charged the company and six of its executives in February 2005 with violating the Clean Air Act by releasing asbestos from a vermiculite mine in Libby, Mont., even though they allegedly were aware of its dangers.

The company operated the mine from 1963 to 1990, and workers carried the asbestos home on their clothing. Millions of tons of the asbestos-contaminated vermiculite ore also were shipped from the mine to hundreds of processing plants nationwide for use in insulation, fireproofing, gardening and other products.

Asbestos has sickened about 2,000 of the town's residents and caused up to 225 deaths, according to attorneys for the residents, which also have sued the company.

The justices' decision, without comment, allows the government's case to go to trial.

W.R. Grace argues that the Environmental Protection Agency's definition of asbestos doesn't cover most of the substances taken from the mine. U.S. District Judge Donald Molloy of Missoula, Mont., agreed with the company, but the 9th U.S. Circuit Court of Appeals overturned that ruling.

Grace spokesman Greg Euston said the company was disappointed with the Supreme Court's ruling.

"We take this seriously," he said. "When Judge Molloy sets a trial date, we will be prepared to defend ourselves."

A spokeswoman for the U.S. attorney's office in Billings, Mont., did not immediately respond to a request for comment.

When Columbia, Md.-based W.R. Grace declared bankruptcy in 2001, it said it had been named in 110,000 asbestos-related lawsuits. Asbestos can cause cancer and other diseases.

The company agreed to a $3 billion settlement in April that will allow it to emerge from bankruptcy without further asbestos liability. The settlement sets up a trust fund that will be used to pay claims against the company, which hasn't yet emerged from bankruptcy.

W.R. Grace also agreed earlier this year to pay the U.S. government $250 million to reimburse it for the investigation and cleanup of asbestos contamination in Libby.

The Supreme Court also rejected a separate appeal by W.R. Grace's executives, who could face prison sentences of up to 15 years if found guilty.

The cases are W.R. Grace & Co. v. United States, 07-1286, and Henry A. Eschenbach v. United States, 07-1287.

Shares of W.R. Grace fell 62 cents, or 2.3 percent, to $26.46 in late-afternoon trading.

AP reporter Katie Oyan contributed to this report from Helena, Mont.

Copyright 2008 Associated Press