BILLINGS -- Government attorneys facing a looming trial date in their highly publicized prosecution of W.R. Grace & Co. now have lost a key element of their case.

Claims that Grace and former top officials conspired to ''knowingly endanger'' miners and residents of Libby by exposing them to asbestos cannot be pursued because the time for doing so has expired, U.S. District Judge Donald Molloy, in Missoula, wrote in a recent order.

The government failed to allege the defendants committed an overt act to knowingly endanger others within the five-year statute of limitations that began in 1999, Molloy decided.

Attorneys on both sides declined comment. Justice Department spokeswoman Cynthia Magnuson said only, ''We are considering our options at this point.''

It was a partial victory for defense attorneys, who had sought to have the conspiracy count of an indictment handed down last year thrown out or limited. Molloy did not entirely dismiss the conspiracy charge; he noted allegations raised by the government that defendants concealed wrongdoing from the Environmental Protection Agency, which was investigating the contamination at the firm's now-defunct vermiculite mine near Libby, or acted to limit their liability.

But the allegation the defendants ''knowingly endangered'' residents and miners has been a major piece of the conspiracy charge.

Last year, a federal grand jury indicted Grace and seven one-time officials, accusing them in part of conspiring to hide the health dangers posed by the asbestos released into the air from the company's mine in northwest Montana. The mine closed in 1990. Hundreds of people in Libby have been sickened -- some fatally -- by exposure to asbestos.

The case is set for trial in September, though the defense had previously sought a delay of four to six months.

Earlier this month, Molloy set a July 19 hearing in the case; he did not immediately specify what issues would be argued then.