July 2009 Settlement Offer Letter

McGuireWoods LLP
201 North Tryon Street
P.O. Box 31247 (28231)
Charlotte, NC 28202
Phone: [phone]
Fax: /04.343.2300
www.mcgu i rewoods.corn
Benne C. Hutson
Direct: 704.343.2060
July 21, 2009
VIA U.S. MAIL AND
ELECTRONIC MAIL
John A. Payne
Assistant Attorney General
North Carolina Department of Justice
9001 Mail Service Center
Raleigh, North Carolina 27699-9001
Re: Ashland Inc. vs. Division of Water Quality / Settlement Offer
Case No.: 09-EHR-2999
Dear John:
bhutson@mcguirew(>ods.com
Direct fax: [phone]
This letter follows up on our recent telephone conversation in which you suggested that
the parties attempt to reach a negotiated settlement of this matter and requested that we put
forward a settlement proposal as well as provide information on our availability for either a
conference call or a meeting. To prepare this offer, last week I met with Ashland's in-house
counsel and environmental engineer with responsibility for this matter at the company's
headquarters in Columbus, Ohio. This morning I met with the site manager who provided me a
tour of the facility so I could have first-hand observations of the operations as well as the
physical layout of the site.
This letter sets forth an offer to settle this matter. This offer is made without admission
of liability or admission of any fact on which liability could be based. Pursuant to Rule 408 of
the North Carolina Rules of Evidence, this letter sets forth an offer to compromise and, as such,
statements made in this letter or in any way related to this letter shall not be admissible in this
proceeding or any other judicial proceedings.
Having now seen the site, it is apparent to me that not only does Ashland have a strong
legal argument, as already set forth in our prehearing_s.tafez)nenbut also a strong factual position o�
which.that argument will be based There is no manufacturing that occurs at this facility.
1. A- Most of its shipments come in bulk with most materials transferred to a tank farm and then to the
ultimate packaging, usually 55 -gallon drums or other comparably sized containers. In some 1.6
instances the facility blends different bulk materials which blends are then placed in smaller
containers for shipment to customers. None of the operation8 involve active chemical reactions I. C
or the creation of new chemical substances from raw materials:' All handling of materials are in
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John A. Payne
July 21, 2009
Page 2
2 , enclosed contained areas, whether they be buildings or tanker off-loading areas. The tank farm
is diked. All piping to transfer product is above ground. The stormwater drains capture runoff
from the roofs of buildings as well as runoff over the area where trucks and forklifts move
through the facility. No off-loadin , blending or repackaging of materials occurs in the areas of
the facility exposed to stormwater. R�sia?`-nh-n
In short, not onlyare the operations of this facili not subject to the regulations
governing stormwater associated with industrial activity, Put the design, construction andr�
practices of the facilit minimize to a significant extent an release of inaleria s lulurAxrwtei
Y g Y
drains or the exposure of materials to stormwater. {
,f to ,-, r All of the stormwater outfalls are located in basically the same area of the facility.
According to a figure of the facility I was provided as well as my own stepping off of the
distance, the four stormwater outfalls are located within about 40 feet of each other. Because of,
the proximity of the outfalls to each other and the homogeneous nature of the stormwater;
collected throughout all parts of the facility, a sample collected from one outfall would most\
likely be indicative of discharges from any of the other outfalls.
In light of the regulatory applicability and these facts, Ashland could easily take the
position that nothing more than qualitative monitoring of its stormwater discharge is necessary.._
owever, in the spirit of compromise, Ashland is willing to sample outfall 001 which collects
stormwater from the area near the building where hazardous waste is stored (even though such
storage occurs under cover on pads with berms to collect any spills, leaks or other discharges.)
Ashland will collect a stormwater sample from this outfall on an annual basis and analyze it for
the constituents identified in Table 1 of Section B of the permit being appealed. Ashland will
compare the analytical results to the benchmark values set forth in Table 3 of Section B. If after
the third annual sampling event none of the benchmark values have been exceeded, then the
analytical monitoring .requirements shall terminate.
If you have questions, need clarification or wish to discuss this offer further, please give
me a call.
In terms of availability for a conference call or meeting to discuss settlement further,
Ashland's environmental engineer is not available this week and I will not be available next
week. Beginning the first week. in August, we should be generally available. If you will provide
us some dates and times, we will try to find one that works for everyone. However, we are
hoping that we can resolve the matter without the commitment of everyone's time in such a
manner.
This case is scheduled for hearing the first week in September. Our discovery deadline
expires in approximately a month. In order to be ready for a hearing in the event that settlement
negotiations are not successful, I will be serving initial discovery requests on you in the next few
days. I also note that we are to have a mediated settlement conference completed by the end of
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John A. Payne
July 21, 2009
Page 3
August. If you could please advise who you would like to see serve as a mediator and you and
your client's availability for such a session, I would appreciate it.
Thank you for your consideration of these matters.
Sincerely,
McGuireWoods LLP
e C. Hutson
cc: Joseph A. French
Linda J. Dennison
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