Re: City of Bloomington et al. vs. CBS

August 10, 1998

From: MALLOR CLENDENING GRODNER & BOHRER
(Attorneys for City of Bloomington)

To: David Berz
Well Gotshal & Manges
1615 L Street, NW
Washington, D.C. 20036-5610

Dear David:

It is my understanding that the Project Managers' meeting last week was not productive. CBS advised the governmental parties that it will consider no more than a 300 8pm non-powered interim treatment system for the Illinois Central Spring ("ICS") and that it may be three to five years before CBS has what it considers sufficient data to evaluate the need for a permanent treatment system.

Over the last several years, all parties have been aware of the continuing release of PCBs at ICS. Based upon CBS own data, at least 6,500 grams of PCBs, or approximately 14.5 pounds, are released at ICS each year. (See enclosed Chart 10 from documents provided by CBS on May 21, 1998). The PCBs released at ICS are believed to be the primary source of the PCB contamination in Clear Creek. The governmental parties have made clear their interest in stopping the release from ICS as quickly as possible, with the ultimate goal of remediating Clear Creek and eliminating the need for fish advisories.

Based upon the assumption that CBS was also committed to stopping the release of PCBs at ICS, the City has participated in negotiations about "hot spot" removal at the Lemon Lane Landfill ("LLL"). The City may have been willing to accept less than a complete removal of all PCB contaminated materials at LLL, provided that meaningful water treatment would be implemented immediately to effectively minimize the continuing release at ICS. In an effort to address concerns expressed by CBS, the City also participated in discussions about interim treatment systems. Unfortunately, it is clear there continues to be significant and apparently unresolvable disagreements between at least CBS and the City over the need for immediate water treatment at ICS, the plant sizing and operating efficiencies required for meaningful treatment at ICS, and the length of any "interim" period.

The City is disappointed in CBS' position on water treatment at ICS, given the repeated statements by CBS about its commitment to a safe and effective remediation of the PCB contamination in 31Oomington and Monroe County. CBS' position, if agreed to by the governmental parties, would result in the continuing release of significant amounts of PCBs each year into ICS, Clear Creek and the surrounding environment. Permitting that continued release is certainly not consistent with a commitment to safe and effective remediation.

As our discussions concerning interim water treatment systems seem to have failed, the City will insist that permanent water treatment at ICS be installed as a component of the removal and related remedial activities to be conducted in 1999. The permanent water treatment system would be expected to treat all flows to the applicable State water quality standards. The City understands CBS disputes that any water quality standards apply to the ICS flow. It appears judicial proceedings may be required to resolve that dispute and the general dispute over remedial activities at LLL and ICS.

Assuming that CBS proceeded to construct a permanent water treatment system at LLL next year, the City would agree to revisit the system sizing and design at such time as CBS produced data which supported a reduction in the system sizing and operating efficiencies.. The City believes this process, building a permanent system now to treat all flows, is the most effective way at this time of minimizing the impact of any continuing releases of PCBs at ICS.

The City is aware ofthe repeated statement by CBS representatives that CBS is only willing to spend certain but undisclosed sums of money to complete the remedial activities at LLL. Certainly, the City is aware that CBS has an obligation to its shareholders. However, the City also strongly believes that CBS and its shareholders have a greater obligation to the citizens of Bloomington and Monroe County to stop the continuing release of PCBs now.

You have advised me that Dottie Alke has been designated as the "Principal" for CBS to replace Sam Pitts, who has retired. I have been asked by Mayor Fernandez to express the City's disappointment in that appointment. The involvement of Principals has been a procedure for the parties to resolve disputes before resorting to formal litigation. To date, the Principals have been effective in resolving several disputes that the Project Managers and their technical staffs have been unable to resolve. As Ms. Alke is also the lead technical staffer CBS she will be, and is, the person responsible for determining the position of CBS before a dispute is submitted to the Principals. It is unrealistic to believe that her participation as a Principal will lead to resolution of disputes on which she has already been the primary decision maker for CBS.

The City can only assume that the appointment of Ms. Alke as Principal is intended as a statement by CBS that discussions of among the Principals are of no further interest or value to CBS. Accordingly, the City anticipates that all parties will be forced to use the services of the Court to resolve the current disputes and all disputes which may arise in the future.

Finally, I anticipate, based upon the prior history of this matter, that CBS will feel compelled to respond to this letter with a lengthy defense of its position. Please be assured that this letter does not require a response and is written solely so that CBS is fully aware of the City's position in advance of the Status Conference scheduled with Magistrate Foster for Friday of this week.

Sincerly