Federal prosecutors won a substantial victory Thursday when the Ninth U.S. Circuit Court of Appeals restored key elements to the criminal indictment against W.R. Grace & Co. and seven of its top or former officials.

The panel of senior judges in Seattle reversed several contentious decisions issued last year by Chief U.S. District Court Judge Donald Molloy, who dismissed charges central to the government's sprawling case against the chemical manufacturing company.

In particular, prosecutors will again press their theory of "knowing endangerment," which lies at the core of a conspiracy count alleging that top executives concealed the dangers associated with asbestos-contaminated vermiculite mined near Libby. Conspiracy, which carries a prison term of five years, is among the most serious charges listed in the 49-page indictment, which federal officials unveiled in February 2005.

"In reversing several pretrial rulings … today's decision by the Ninth Circuit is an important victory for the United States," according to a written statement from Montana U.S. Attorney Bill Mercer.

Phone calls to William M. Corcoran, vice president of public and regulatory affairs for W. R. Grace & Co., were not immediately returned.

Mercer said he won't know anything about the trial's schedule in the near future until the case is mandated back to U.S. District Court. Before that can happen, lawyers for W.R. Grace must decide whether to seek further review under the appellate court.

In a case billed by federal officials as "one of the most significant environmental criminal indictments in U.S. history," the Department of Justice initially charged that Grace knew its vermiculite contained deadly levels of asbestos and deliberately concealed the danger from miners, Libby residents and consumers worldwide who used the product for insulation in walls and attics.

On Thursday, the appellate judges also reversed a ruling limiting the materials available to expert witnesses at trial; reversed a decision that would have narrowed the definition of asbestos, and precluded defendants from using an affirmative defense not authorized by the Clean Air Act.

The latest resolution puts to bed a string of appeals that prosecutors brought before the Ninth Circuit last summer, arguing that Molloy's decisions hindered the government's efforts to bring Grace to trial, a high-profile affair originally slated for September 2006.

In the government's motion to delay the trial, Assistant U.S. Attorney Kris McLean said Molloy's pre-trial rulings severed the government's case against Grace. Without the central allegations intact, he argued, it was impossible to present jurors with the entire case.

The original conspiracy count against W.R. Grace contained two objects: that the company violated the Clean Air Act when it knowingly released cancer-causing asbestos into the air, and that the company defrauded the government by derailing the investigations of environmental agencies. But Molloy dismissed the "knowing endangerment" object of the indictment, ruling that the statute of limitations to make such allegations had expired.

"This court's recent pretrial rulings have changed the legal and evidentiary landscape of trial," McLean wrote in his brief.

Among Molloy's other disputed rulings reversed by the Ninth Circuit in July was an order banning certain witnesses from testifying at trial, and another that prohibited the government's use of numerous documents, including three critical environmental health studies spelling out the hazards of asbestos.

One federal study at issue concluded that more than 1,200 people in Libby and surrounding areas showed signs of lung abnormalities tied to asbestos diseases from the mine. The problems appeared not only in miners who had worked at the site, but Libby residents who came into contact with fibers in the course of their daily lives.

Since the trial was postponed last year, one government witness and a defendant have died.

Les Skramstad, an activist and former Libby resident who fought for years against Grace, died in January, just 11 weeks after being diagnosed with mesothelioma, a fast-killing form of lung cancer attributed to asbestos exposure. A month later, Alan Stringer, a former general manager of the Libby mine who was charged, also died of cancer.

Having survived the appeals process, prosecutors are ready to begin a trial that many expect to last several months in Missoula, Mercer said.

"The grand jury indicted this case in 2005. With the resolution of both appeals brought by the government, we look forward to trial," according to his statement.