DAVID GIANNOTTI - semspub.epa.govFebruar! 19.2009 Page .; Attached as Exhibit 6 to the Giannoni...

2340 BEI-LA VISTA DRlVE MONTECITO, CALIFORNIA 93108

TELEPHONE: (805) 695-8463 FACSIMILE: (805) 565-4822

DAVID A. GIANNOTTI A PROFESSIONAL CORPORATION

ATTORNEY AT LAW [email protected]

1925 CENTURY PARK EAST, SUITE 950 LOS ANGELES, CALIFORNIA 90067

TELEPHONE: (310) 203-2661 FACSIMILE: (310) 203-2610

hlr. Frederick F. Schauffler Chief. California Site Cleanup Section I U.S. En\ ironmental Protection Xgenc).. Region IX 75 Ha\\-thorne Street, %IS - ORC-3 San Francisco. CA 94 105

Re: Uniretl Stc~res rf Americc~ 1: Cl~rvron Clremictrl Co., el (11. U . S . Central District Court. Case No. CV 91-6520 MKP (Fs)

Dear Mr. Schauffler:

I represent the Work Del'endants under the Third Partial Consent Decree (CD-3)' The pirrpose of this letter is to: ( 1 ) invoke the formal dispute resolution pro\risions of CD-3, Section XXII regarding the Eniir~nmental Protection Agency's ("EPA") claim for oversight costs related to the Thermal Destruction Facility ('.TDF");' and (2) set forth the Work Defendants' statement of position oil the matter in dispute.

1. ESTRODUCTION

On December 5 , 2005, the EPA sent a letter, a copy of wliich is attachcd as Eshibit I to the dectaration of David Giannotti ("Giannotti" and "Giannoni Decl."), '-formally" demanding payment of its alleged oversight costs for the TDI: item of Excluded Work under CD-3 and invited the Work Defendants to invoke dispute resolu~ion.

On January 5. 2009. the LVo1.k Defendants responded \.s ith a letter, a cop) of u'nich is attactled as Exhibit 3 to the Giari~iotti Decl.. \vhich is irlcorporated herein by reference. EP.4 and the M'orL Defendants (collectively the "Parties") asreed the Janu'iry 5 . 2009 letter was effectike Jani~ar), 12. 2009. (Giannoni Decl. par. 6. Exhibit 3) The January 5. 2009 letter incoked informal dispt~te resolution. pursuant to Section XX1I.B. (Giannotti Deci.. par. 7) Informal dispute resolution did not resolve the dispute (Giannotti Decl.. par. 8) Pending the resolution of this dispute, the \Vork Defendants paid the amount EPA claims into a separate interest bearing account. (Giannotti [Iecl., par. 9)

1) If this case procecds to judicial rttvizw, the Work 1)efendanls \\.ill request the Court to take judicial notice of all relevant pleadings. consent decrees and Coun orders. To kcep this letter as short as possible, the \:ark Defendants did not attach all these docu~nents to this letter. In the case of judicial revieil-. the iFrork [>efendants also reserve rheir additional rights as provided in CD-3 regarding scope of materials to be considered by the court.

7 : ZS All filrther "Section" references \\.ill be to CD-3. unless otlienvise noted.

SDMS DOCID 1116045

February 19,3009

EPA gave the \I'ork Defendants an sxte~ision lo Februao 30, 20U9. ti) subrnit this Icttcr. (Giannoni Decl., par. 10. h l i i b i t 4 ) 111 addition to invoking formal dispute resolution. the M'orh Defendants request the opportunity to meet \\it11 the €PA Director of the l4azardous Ci'aste \tanagerne~lt Division after the EPA submits ils statetnent of position and before EPA issues its final adniinistrati\e decision. (Giannotti Decl.. par. I 1 )

This letter (and its e~liibits) and the Ciiannotti Decl. (and its exhibits) set forth the Work Defendants' urirten statement of position. specitically that the Work Dzfendants are not responsible for EPA's alleged oversight costs for the TDF item of Excl~~ded \Vork.

2. ISSUES PRESENTED

The issues preserited by this dispute are as f'oilo~\*s:

( 1 ) M'hetlier CD-3 permits EPA to recover oversiglit costs for the TDF item of Excluded Work performed by the Work Defendants;

(2) \\:herher CD-3 is ambigi~ous and, if so, ho\\ it should be interpreled:

(3) \I/hether part or all of EPX's claim is barred b>. the four year statute of limitations:

(4) L'vjliether tlic Miork Defendants are entitled to have CD-3 reformed: arid

5 Whether EPA's accounting of' its oversight costs is accurate.

3. F-ACTL'AL BACKGROUND

This dispute relates to the Operating Industries. Inc. landfill f ac i l i~ located at 900 Potrcro Cirande Drive. klontere~ Park. CA ( tl~e "Site"). Section IV.

a. Correspondence Predating CD-3 Supports the Work L)efendants' Position.

Attached as Esliibit 5 to the Giannotti Decl. is a copy of a January IS. 199 1 letter fro111 I'PA to Giannotti setting fonh EPA's proposal for further negotiations of the terms of\vhat became CD-3.

b. 0 - 3 and Its Rele.cpant Provisions Support the Work Defendants' Position.

The Court granted the EP4's motion to enter CD-3 on March 30, 1992. (Giannotti Decl.. par. 1 3 ) As set fonh belo\\. there are specific provisions in CD-3 \+liicli support the M;orh Defendants' position in this dispute. It is important to note I'PA drafted CD-3. (Giannoni Decl.. par. 14)

c. Post CD-3 Correspondence and Conduct Supports the Work I)efend;rntse Position.

Februar! 19.2009 Page .;

Attached as Exhibit 6 to the Giannoni Decl. is a copy of a June 6. I995 letter from EPA to Ken Hewlett. In the June 6. 1995 letter, €PA notiiied Kew Cure, Inc. ("New Cure"). the Work Defendants' Pro-ject Coordinator. that EP.4 wanted the Work Defendants to perform the 'TDF item of Excluded Work. EPA stated as follows:

"As pro\ided in CD-3. the TDF item of Excludetl \borh shall be considered Ibork under CD-3 and the CD-3 Work Uefendants sllal! be resporisible for attaining Performa~lce Standards pertaining to tlie TDF."

The June 6. 1995 letter does nor indicate that EP.4 \vill seek reimbursement of i ~ s o\.ersighl costs for the TDF item of Excluded Work.

Attached as Exhibit 7 to the Giatinotti Decl. is a copy of an April 27. 2004 letter from EPA to Itobert Butler. In the April 27, 2004 letter, EPA notified New Cure that EPA \vanted the l\;ork Defendants to perfor111 the North Parcel ("NP") item of Excluded Work. El'.\ stated as follo\is:

"As provided in CD-3. ths North Parcel item of Escluded Work shall be considered Work under CD-3 and the CD-3 Work Defendants shall be responsible for attaining Performance Standards pertaining to the North Parcel ."

The April 27. 2004 letter does not indicate that EPA seek reimburseme~ir of its oversigh1 costs for rhe N P item of Excluded Work.

Pursuant to the ternls of thc Eighth Partial Consent Decree ('-CD-8") entered by rhe Coun on May 23. 2002, EPA and the Work Defendants enrered into a letter agreement on No~ernber 9. 2006. regardinp allocation and disbursement of certain funds related to tlie Site. X cop! of the letter agreement is artached as Eshibit 8 to the Giannotti Decl. In the November 9. 3006 letter agreement, the Parties set forth the terms under which EPA \ \odd be reimbursed for its aersight costs for the NP item of Excluded Ii orh. described in CD-3. Section VIII.A.3. This is important because (as discussed in derail belo\\) it shows EPA has interpreted Cll-3 consistently \vith the Worh Defendants' interpretat ion (i.e.. CD-3 does riot pro\ iae for reimbursement for EPA's olersight costs for the TDF or NP items of Excluded \ilorh).

Attached as Exhibit 9 to the Giannotti Decl. is a copy of a September 27. 2007 letter from EPA to Giannotti. This letter is important for t\vo reasons. First, it is the first tilile €PA requested reimbursement for oversight costs relating to the TDF item of Excluded Work. even though it has presumably been incurring such costs since 1995. Section XVI1.C requires EPA4 to bill t11e Worh Defendants for an\ recoverable oversight costs on an annual basis. Second. as further described belo\v. the letter shows EPA interpreted CD-3 (regarding the si~b.ject dispute) in a completely different manner than i t does now.

Attached as Exhibit 10 to the Giannotti Decl. is a copy of a September 30, 2008 letter from €!'A to Giannotti. This letter is important because it shc\vs EPA interpreted CD-3 (regarding the sub.icct dispute) differently again.

As set forth abow. attached as Exhibit I to the Gia~inoni Decl. is a copy of a Ilecember 5 . 1008

February 19.2009

letter from €PA to Giannotri. The Work Defendants assume this letter sets hn11 EPA's latest interpretation of CD-3 relating to the subject dispu~e. If our understanding is incorrect, please inform me in writing promptly so \\e may supplement this statement of position.

Also as set forth above. attached as Exhibit 1 to the Giannotti Uecl. is a cop! ot'a January 5. 7009 letter setting forth the Work Defendants' response to EPA's demand.

d. CD-8 and Its Kelevar~t I'rovisions Support the Work Defendants' Position.

Attached as Elhibit 1 to this letter are copies of pages 23 and 9 1 of CD-8 1% hich specifj in clear language that the CD-8 Work Defendants are responsible to pa> oversight costs incurred bi\ EPA \+lien the CD-8 Work Defendants perform items of CD-8 bscluded LVork. These pages shou EPA is capable of writins unambiguous language regarding thc payment of oversight costs \\hen i t \\ants to do so. While there is specific language in CD-3 regarding the Work Defendants' obligation to pa) oversight costs. that lariguage only relates to ;lie North Slope of the South Parcel ("NSSP") item of Excluded B'orL. r~ot tlrr TDF i f a n of E.uclrtrtcd Work preserrt!~ crt bsuc. The language of CD-8 shows tlizt if EPA \\anted to craft a provision to support its present interpretation. i t could have done so.

a. California Law Applies to this Dispute.

Consent decrees are construed as contracts. F'irefighter.~ Loccrl C'itiot~ :Yo- 17h'4 Y. Starts ( 1984) 167 U.S. 56 1, 607. 104 S.Ct. 2576. 3602 and Unilell Srctres 1.. 17T Conrinc.i~ftrl Bokiilg ('0. ( 1975) 420 U.S. 223.336-237.95 S.Ct. 926. 935.

"Federal courts . . . apply state rules governing interpreiation of contracts." Sch~barzer. et al.. Cal. Practice Guide: Federal Ci\*il Procedure Before Trial (The Rutter Group 3009) 5 1 : 19 1 . citing Srtlte of' Keu? York 1'. Blank (2nd Cir. 1991) 27 F.3d 783. 788 and .llletr 1.. Ce(iur Reul Estote Grozip, LLP (7th Cir. 2001 ) 236 F.3d 374.376.

b. CII-3's I'rovisions Do Sot Permit EPA to Recover Oversight Costs for I'DF Work Perfornled by the Work Defendants.

"The basic goal of contract interpretation is to give effect to the parties' mutual intent ar the time of contracting. [Citations omitted.] \illien a contract is reduced to ivriting, the parties' intention is determined from the \ \ r i t in~ alone. if possible." Fburrfling :\fenrhers ofrhe .Yeic.pori Beucll C'ozarrt?. ('llrh I:. ~ V e ~ p o r r Beuck C'oz111fn. Club. Iirc (2003) 109 Gal-AppAth 941. 955. "Unless the parties ha\e indicated a special meaning. the contract's words are to be understood in their ordinar? and popular sense. [Citations omitted.] C1t.tn~;fortl I: I);.ull?er Si~ieid Mfg. fire. (2008) 44 C'al.4th 54 1. 557. ..Effect is 10 bc given to the parties' ~niltual intent [citation omitted]. 3s ascertained from the colltract's la~tzuagc if ' it is clear and esplicit [citation omitted]." Ibid.

"Extrinsic evidence is admissible to prove a meaning to tvliich the contract is rcasonabl\ susceptible. [Citation omitted.] If die trial court decides. after receiking the extrinsic eiidence. the

February 19.2009

language of the contract is reasonably susceptible to the interpretation urged. tlie evidencc is admitted to aid in i:iterpreting the contract. [Citation omitted.] Thus, -[t]he test ofadniissibiliry oSex~rinsic evidence to explain the meaning of a tvritten instrt~ment is not nhether i t appears to the court to be plain and unambiguous on its face. but whether the offered ekidence is relevant to prove a mcaning to ~vhich the language of the instru~nent is reasonably susceptible."' [Citation omitted.] Folrtiditlp ,2ierrihe,:s of I ~ U

.It~cport Bemh Co~it i t l~ Cl~rh 1.. ~\;e~cporr Ucack C'oui~ri:), Club, htc.., .rtrpra. 109 Cal.Xpp.4th at 935-956.

Admissible cstririsic cvidcnce includes: ( I ) prior negotiations (He.\[olr \: firr-ttlers 01.5. Grorp ( 1 984) 160 Ca1..4pp.3d 102 and FV~rg1it.r 1: GIci~dcrle .-Ih~enti.sr .\led C'rr: (1 989) 21 6 Cal.App.3~1 1379): (3) prior drafts of tlie agreement at issue (Srockro/l 1.. Stockiort Plnzcr C'or-p. ( 1968) 261 C'al.App.2d 639. 644): (3) a party -s admissions (He.~lon \I. F~lrtiiers ins. Gruzp, suprtr, 1 60 Cal.App.3d at 3 1 3-4 1 5): and (1) a pam's subsequent actions bct'orc dispute arose (Hcsron 1.. Farn~ers 117s. Grozrp. J Z ~ ~ J ~ L I , 160 Cal.Xpp.3d 402 .4 13).

"California reco~%izes the objective tlieory of contracts [citation omitted], under \\hich '[ill is the objecti1.e intent, as evidenced by the \+fords of tlie contract, rather than the sr~b.ieclive intent of one of the panies. that controls interpretatior~' [citation omitted]. The panics' uridisclosed intent or understar~ding is irrelevant to contract interpretation." [Citations omitted.] Folnl~ling A1enlhc.r.r qf //he ,\e\tpon Br~rc-h C'ounri:~ Clzrb v, ,\-e~tpor.r B C L I C ~ Ci)tr/iti:\- Cllrb. Ir~c.. szrpru. 109 Cal.App.lth at 956.

I. EY.4.s Interpretation of CD-3 Contradicts Its Plain Meaning

Section V .J delines --Escluded M'ork." It includes the TDI: item of Escluded N'ork at issue. There is no reference to costs. o\,ersight. or other\\ ise in this definition.

Section V.S detines "Future O\ersight Costs." It includes all costs incuired by F,PX in oversight of Work and Escluded b'ork.

Section V.AM defines the term '-\\'ark." It docs not reference costs.

Section V1.H requircs "Dekndants'' 10 reimburse €PA for Future Oversight C:osts as provided in CD-3.

Section VII.C.5 requires the Work Defendants to meet all Performance Standards (delined in Section V.AA.) n~ith respect to the Work at the Site.

Section V111. subparagraphs A.1. A.2, and A.3 further define Excluded \\'orL as including three items: ( 1 ) Cover Protection Component of the Co\ser System for the NSSP: (7) design and construction of the TDF; and (3) NP tvork.

By the specific language in Scction VII1.A.l.d. the Work Defendants agreed w pa: oversight costs lor the NSSP item of Excluded Work. Sec: rrl.so, Section XVI1.C. 1, \I-hich spccificall> rrfi-rences this obligation. The Work Defendants' obligation to reimburse EPA's oversigllt costs for the NSSP irem of Escluded \irork applies regardless of \\,I10 perfarms it. Pursuant to EPA's request. the Work Llefendants pedornied this itern of Escluded C\/ork and also paid EPA's o~ersight costs related to it.

February 19,2009

(Giannotti Decl., par. 20)

In sharp contrast. CD-3 has no provision which obligates the Work Defendants to pay EPA's oversight costs for the TDF item of Excluded Work (set . Section VIll.A.2) or the hP item of Excluded H'ork (see. Section VIII.A.3. I-lad EP.4 \vantc?d to require tile Work Defe~itndants to pa> EP:I's oversi~lit costs for the TDF or NP items of Excluded Work, EI'A should have done 5o. and this language would have been included in Sections Vlll.A.2 and VIII.A.3 to be consisrenr \\ih rhe Work Defendants‘ obligation to pay EPA's oversight costs for the NSSP item of Excluded \\:or!-.. Accordinpl)., EPA's position in this dispute has no merit.

Section XVI1.C provides in pertinent part as follo\vs:

"Work Defendants shall reimburse EPA's Hazal.dous Substance Superfund for the oversight costs incurred by the United States under this Decree for l'ork. ns well N S tlre cost.^ itrcirrred by tire L;rritrd St~te.s it1 osersigllt of the (ictirities perforrtterl prirsiratlt to p(1riigrtiph 1~111..1.1 (Cover Prorectiorr Conrporrent cg' the Cover Svstrnr for tlr e .~Vortlr Slope of rlre Sorrtlt P~rce l , otr ptrge 29) o j Sectiotr I W (E.uclrr(ferl I,l,urk) ." (Emphasis added.)

Once again, there is a specific reference as 111 the Work Defendants' obli~atior~ to pay EPA's oversight costs reinled to Excluded Work. and this specitic reference does riot include the Work Defendants' obligation to pay for oversiglit costs relating to the TDF or NP items of Excluded Work. If the intent of the Parties had been to require 1112 Work Defendants to pay the EPA's oversight costs on all of the Escluded Work items, tliis provision uould have used the defined term -'Future O\~ersight Costs" as the trigger for payment of such costs. as opposed to the Inore limited description of payment only for the NSSP Excluded Work item used in the language of tliis provision.

Section XVll.E.2 provides that "[tlor each item of Excluded Work . . . Llle \\:orl\ Defendants shall pay all cosrs over $6 million incurred for each such ile~ii performed by Work Defcndants . . . ." There is no reference or requirement to pay EPA's oversight costs.

Section XV1II.D addresses costs that may be paid from rnone) in the CD-3 Cash Escrou Account. It specifically perniits use of this money for "Future Oversight Costs not paid by \iforh Defendants under . . ." ;in\ of the p~ovisions addressing Excluded Work referenced above. When rcad as a \\hole. CD-3 permits EPA to collect its oversight cos~s for TDF and N P itenis of Excluded Worh from the CD-3 Cash Escron. 1101 fro111 the \Vork Defendants.

EP.4 contends that Section V1II.D supports its claim. This section states in pertinent pan as folloivs:

-'if \\:ark Dekndants perform an itenl(s) or ponion of l<xcluded M'orh, all references in tliis Decree to U'ork shall be read to apply to that item(s) or porlion of Excluded M'ork. rrrrtl Work Defer~(l(rtrts shtrll be respotr.sible for u t~~i t l i r~:; Prrfortrrrrtrce Stnrrd(~rrls pertcrirlirrg to tlrcrt

February 19.2009

ite~rz(s;) or porrintt of E.vc/rr(/elrd I.l,'or/i." (Emphasis added. 1

Oddly, EPA says this paragraph means tliat Section XV1I.C.I '-must be read as though i t says: '\irork Defendants shall reimburse EP.4 for Oversight costs in rclation to Work and, by vir~ue of Paragraph VIII.D, each item of Escluded work. to the extent performed by the Work Defendants.' As thc Work Defendants liave performed or are performing the TDF and NP Excluded M'ork items. Paragraph XVII.C.l's reference to the Work Defendants' obligation to pay EP.4'3 Oversight costs for -Work' must also be read to refer to EPA's Oversight costs for the TDF and NP Excluded \Vork items." (Giannotti Decl.. Exhibit 1 )

EPA's interpretation of CD-3 is inconsistent \\ ith its plain meaning. As stared. Section XV1I.C references only one item of Escluded Work (i.e.. NSSP) and does not reference the orher r\\o items (LC. . TDF and NP). EPA c o ~ ~ l d have included a requirenient for the Work Defendants to pa) for oversight costs for the other tibo items if EPA wanted. but it did not.

The sole purpose of Section V1II.L) is to require the Work Defendants to attain Performance Standards (as defined by CD-3) if'they pcrform Excluded Work. Section VI1I.D was necessary because Section VI1I.B provides that if Escluded Work is performed by others, then tlie Work Defendants tlo 1101

I~cnv to irrtnilt Pet-form~~nce Sic~~m'ards. Ho\vever, Section VI1I.C obli~atcs the Work Defendants to perform Escluded Work if EPA does not order other non-settling PKPs to perform this work. Accordingly. EPA wanted to e~isilre if i t ultiniately requested the Work Defendants to perform Excluded Work. rhe Work Defendants would perform the Excluded Work accord in^ to Performance Standards. Section V1II.D has nothing to do with payment of'EPA1s oversight costs. If EPA wanted Section VI1I.D to address payment of oversight costs, it \\auld have included unambiguous language regarding oversight costs. Having failed to do so. EPA cannot now claim Section VII1.D means something other than what it says.

. . 11. Estrinsic E\,idence Supports the N'orli 1)efendantsq Interpretation of C1)-3.

As stated, extrinsic e\.idence is admissible to prole a meaning to \\.hich thc contract is reasonably susceptible. The \i'orh Defendants. therefore, submit the Giannotti Decl. (and attached exhibits) to prove their interpretation of CD-3 (as set forth in this letter) is correct.

In 1990. EP4 issued Specia; Notice letters and a draft CD for the Gas Con~rol and Coirsr OU. (Gian~iorti Decl.. par. 2 1 ) EP.4 sought construction of landfill cover. gas control. and construction of tlie TDF, plus long tenn O&M. (Giannotti Decl.. par. 32) There \\ere no pr~\~isions for excluded uorh or cash out oppomnities b r PRPs. (Giannotti Decl.. par. 23)

The Work Defendants were tlie onl>' P W s tliat offered to do the work nccessar) !o implement the remedy. but the? were not willing to do all of the \vorh nor pa) all past costs or 0&M costs into the indefinite future. (Giannoni Decl., par. 24) After a period of negotiations. EPA revised its position. and offered excluded work. prokision for Cash Ilefendants. and limited the period of O&hl. (Giannotti [Iecl.. par. 25. Exhibit 5 ) EI'A's position as of January 18. 199 1 also proposed that CL orh Defendants pa! all oversi_eht costs for design of consrruction and fi\e jei1l.s of ORrhl. pa) $20 million in past costs. and scveral other specified conditions. (Giannotti Decl.. par. 36. Exhibit 5 ) I his restancd negotiations. and

February 19.2009

within the nest few niontlis, an agreement in principle was reached that was reduced 10 draft CD lanpi~age b~ EF'A and ultimately to the tiial CD-3. (Giannotti Decl., par. 27)

This agreement in pririciple provided thc Work Defendants had to pa) o\ersight costs for tlie NSSP but not the TDF or NP. (Giannoni Dccl., par. 28) The li'ork Ilefendants would pay tlie first $16 million of oversight costs. then all such costs o\er $21 million, thus creating a Sj rnilliori gap that remailled EPA's responsibility. (Giannotti Decl.. par. 29) This latter provision is found in Section XVI1.C'. (Giannotti Decl.. par. 30)

Historically, EP.4 interpreted CD-3 in the same manner as the \iTork Defendants. As stated. in the April 27, 2004. and June 6. 1995 letters from EPB io New Cure (attached as Exhibits 7 and 6 to the Giannoni Decl.), €PA reqi~estzd the Work Defe~~dants lo perform the NP and TDF items of Escluded Work and specifically stated that in doing so. they had to attain Performance Standards. However. EPA never mentioned its espectation that the Work Defendants had to reimburse EPA's oversight costs relating to this ivork. This is because EPA did not interpret CD-3 in this manner until just recently.

Even EPA's recent letters indicate interpretations of CD-3 which are inconsistent is~itli EPA's present interpretation. See. El'A's September 27, 2007 and September 30, 2008 letters. attached as Exhibits 9-1 0 to the Giannotti Decl.

In its December 5 , 2008 letter. EPA asserts that CD-3 requires tlie k\lorl\ Defendants to pay for EP.4-s oversight costs for all Escluded k\ ork. And in that letter, EPA essentially redrafted the language of CD-3 to accomplish its purpose. This is improper. ,4s set forth a b o ~ e , an undisclosed intent or understanding is never admissible to si~pport a parties' contract interpreration. Foimidiiig .Ilemhn:\ of thc .\'e\tport Beach Colnilr~ CIzrb r. Xhu-port Beach C'o~nlry Clzrb, Inc, SI/PTU. 109 Cal.App.4th at 956.

Interestingly. uhen €PA dralied CD-8. i t crafied language specifically addressing tlie Work Defendants' obligation to reimburse EPA's obersight costs for Excluded Work (as defined in CD-8). See. CD-8. Section XVII.G.3, attached as Exhibit 1 to this letter. This proves that had EPA wanted to require the Work Defendants to reimburse all of EPA's oversight costs for Escluded Work in CD-3. it could have done so. Having failed to include such language i n CD-3. it is too late for EP:Z to make this demand.

The Parties' conduct after the Court entered CD-3 (and before this dispute arose) also supports the Work Defendants' interpretation of CD-3. On June 6, 1995. EI'A asked the Work Defendants to perforni the TDF item of Escluded work. Presumablv, EPA !)as been incurring oversight costs ever since. il'everfheless, EP.4 did not request reitilbursenzet1t fi)r sattre rinril Septctnher 2 7, 200 7, over 12 years lmer! EPA's inaction is entirely inconsijtcnt with its present interpretation of CD-3. To be consistent in its interpretation of CD-3. EPA would have to concede [hat it is required to bill tlie b'ork Defendants for oversight costs on a "'periodic basis. no more freqi~eritly than annually." Sue. Section XV1I.C. €PA failed to do so because it did not believe the Work Defendants had any obligation to reimburse €PA.

[;PA-s September 27. 2007 letter furthrl* d:lmagrs EPA's contention in this dispute because in the letter. EPA's request for reimbursement alleged that the M'ork Defendants must pa) oversiglir costs because rhey had spent in excess of $6 million, a reference to Section XVII.E.2. EPA's contention i n its September 27. 2007 letter is inconsistent \\ ith its present interpretation of CD-3.

February 19,2009

Afier the Work Defendants objected to EPA's request. EPA changed its inrcrpretation again in its September 30. 7008 letter. In this letter. EI'A ~iow asserted that the Work Defendants are obligated to pay for oversight costs pursuant to Section XL'I1.C. I . another position \+rhich is inconsistent ti it11 EPA's present interpretation of CD-3.

The Parties' conduct regarding oversight costs related to the NP item of Escluded Work fu~llier supports the Work Defendants' position. As stated, EPA requested the Work Defendants to perform this item of Escluded Work in its April 27. 2004 letter. To date, EPA has never billed the Work Defendants for oversight costs for this item of Excluded Work, consistent \vith thc C\!ork Defendants' interpretation of CD-3. There are no facts (or language in CD-3) indicating oversight costs for the N P item of Escluded Work should be treated differently than oversight costs for the TLIF item of Escluded Work.

Recognizing CD-3 did not entitle it to reimbursement of oversight costs for the N P item of Excluded Work EPA specifically required a pro\!ision for the payment of these costs ill the Xove~nber 9. 2006 letter agreement attached as Exhibit 8 to the Giannotti Dec!., providing for such rei~nbursenient. If EPA ht:lieved it could recover its o\:ersight costs Sor the NP Excluded \iiork item under CD-3, there would have been no reason to add it to the No\:eniber 9, 2006 letter agreement. so EPA's actions n i ~ ~ s t be construed as an admission that it could riot recover oversight costs for tlie NP or TDF items of Escluded Work under CD-3.

c. If CO-3 is Ambiguous. Then It Should Be Interpreted to Prohibit EP.4 from Recovering Oversight Costs for the 'TDF Escluded Work Perfornied by W'ork Defendants.

"When a dispute arises over the ineaning of contracr language, the first question to be decided is \\ hether the language is 'reasonahl~ susceptib!e' to tlie interpretation urged by the pa%. If it is not. the case i.i over. [Citations omitted.] If tI?c court decides the language is reasonably susceptible to the interpl-etation urged. the court moves to the second question: uhat did the parties intend tlie lanyase to mean? [Citations omitted.] \i'hetlier the coritract is re;lsonably susceprible to a party's interpretation can be determined from tlie language of the contract itself [citation omitted] or from extrinsic evidence of the parties' intent." [Citation omitted.] ,Turtrher?i Cal. Cilisot~ C'o. 11. Superior C'orirt (1995) 37 Cal.App.4th 839. 837-848. If a contract is capable of two different reasonable interpretations. the contract is ambiguous. Ibid.

The Work Defendants do riot belieie CD-3 is reasonably susceptible to EP.4-s interpretation. But if EPA disagrees. tlien CD-3 is certainly susceptible to the Work Defendants' interpretation. especially when the referenced CD-3 language and extrinsic cvidence is considered. hloreo\*er. to tlie extent CD-3 is ambiguous. it r~ l r rs i he irrterprerccl cl,orriir.st EP.4, ~uirich rircrfferi it. C'hil ('otlr section 1 65 4. .4ccordingly. the Work Defetidant's interpretation of CD-3 should prevail.

d. EPA's Claim is B:;l-retI by the Four Year Statute of Limitations.

"State statutes of limitatio~is are deemed 'substantive' for Erie purposes. Federa! couns therefore apply the same statute of lin~itations as would be applied in a state court . . . ." Schwarzer. et al., Cal.

February 19, 200C)

Practice Guide: Federal Civil Procedure Before 'I rial (The Rutter Group 2009) '11 : 123. citing G~r~trc~tlfy Tr~~sr Cb. of .Ve\v lbrk v. lbrk ( 1945) j36 US 99, 1 10.65 S.Ct. 1.164. 1370-147 1.

The statute of lirnitatiot~s applicable to EPA's claim for breach of contract is four \,ears. Cbtie qf' Civil Procedure section 337. EPA's claim for darnages accrued tvhen the money was allegedly due. Pursuant to Section XVII.C., EPA should bill the Work Defendants for oversight costs on an annual basis. EPA (lid not bill the M'ork Defendants until September 27.2007. The Work Defendants contend that any oversight costs incurred prior to Septeniber 27,3003, are barred.

e. The Work Ilefendants Are Entitled to Have CD-3 Reformed.

If €PA refuses to withdraw its claim for oversight costs related to the TDF item of Escluded Work. the Work Defendants shall seek judicial review pursuant to Sectio~i XXI1.C.l.d. The Work Defendants reserve the right to seek hnherjudicial rtlief pursuant to Sections XXVIII and XXXVIII.

f. EPA's Accounting of its Oversight Costs is Questioeable.

To date, the EP.4 has not provided a complete accounting of its rcquestcd oversight costs (Giannotti Decl.. par. 3 1 ), arid the Work Defendants resenle their right to challenge thern.

David wann not ti, P.C.

Attachments

cc: Glenn Anderson Corey Bertelsen Thomas Butler Shiann-Jang Chern Eric A. Eslcr. Esq. Chris Lichens Janet Magnuson Shelby H. Moore. Jr.. Esq.

David A Giannotti. .4 Professional Corporation

(all \v!a)

Mjwted $500,000 ( f ive hundred thousand dollarr) , then the W ~ r k &

Defendants shall pay an Inflation Adjusted $500.000 [five hundred

&usand dol lars ) . and the Rollaver Account sha l l be meed by

the difference between the Inflation Adjusted $500.000 (f ive

huidred chousand dollars] and the Woxk Oversight Costs. The Work

Defendants shall pay these costs pursuant to Paragraph gyZIII: K of

a s Section.. w i t h i n t h k t y (30) Days of receipt of the cost

3 . pamume of ~ m d e d work hrefsi* Costs. If at . the request of eP&, the Work m f d t s pufom an i t e m or

pcrrtion cf an item of ~ c h t k d Work, the Work ~)ef&ts shall

pay EPA a d the State the Excluded Work,Oversight Costs

associated w i t h t h a t iten? or Grtian of an item of Excluded Hork

to the extent the Excluded Work Oversight C o s u associared w i t h

that Excluded Work plus the Excluded Work d i m s - t made (or

to be made) pursuant to Paragraph (page UBl of Section &IS

[Disbursement of Or1 s - ~ i a l Account Ebdsl is greater than m e

b-ed eight point amen wrcent (108.7%) of the amount

apecif ied in S-mph8 XX. C . (page &!I% (Page

u} of Secrion && (niabursoment of 0x1 s p e c i d Account

as uwdif ied by Paragraph of that section s. The payment

obligation of this W a m h mI1.U is not subject to the

linitations contained in Subparagraph XVL1I.G-2.

4 . w f O t J p r -rise Cosrs. The Work

Defendants shll reirabux~e the United Sta tes for all United

States4 Future Ftesponse Costs o f h a than the Work Oversigtrt Costs

and the Zxcluded Work Oversight COSLS. The limitations contained

in Subparagraphs XVIII -0 .2 [page 612) and W U . U (page 91) of

0. = m ~ - shall mean the United States F;nvirornnantdl Protec-

:ion Agency ar.d any r;uecessor departnents or agencies of the

InLred States.

P. * E X T D ~ Accountw shall z.ean, a s indicated by context.

tiL2er the Work Escrow Account to be escablisbed by tbe h'ork

lefendianrs pursuant to section X I X (Escrow Accomt. Page 72) of

this Consent Decree, or tho Cash Eccroo Account. The term

'-crow accwmt- [ l o w s case) shall mean. aa indicated by

context, on& or mote of the escrow a c w u f s eseablished pursuant

to a settle-f: w i t h EPA (including this C3-t W e e as w e l l

as p r io r and/or later sertleraents) for tbe 011 Site.

Q - 'Excluded Work* sfrali man the response actions deficed

as Excluded Work in Section Work to be performed, page 21)

and in the Scope of Work.

(1. 'Excluded kfork Cornletion Report' shhll mean the Reoort

to be prepared by the Work Defendants and -teed to SPA

p u r s W t to Sections 5.16, 6 -2.13. and 7 .I4 of thc Scope of Work.

S. 'Excluded Work Oversight: Costs' shall mean a l l costs

including, jut not limited to, direct anC indirect costs. that

the United States and the State incur in perfonnhg O v e r s i g h t or

ot4erwise overseeing the itoplwntation of th is Consent mcree

relating co the perfonrance of the Excluded Wo:k by the Hark

Defendants iacludCPg, but not Limited to, payroll costs.

contractor costs, travel costs, laboratory costs and Xntarmst on

SUch C 0 5 b .

T. 'Exhibit A' shall maan the C(as Control a?d Cover ROD,

as defined below, for the Gas Control and Cover Operable

Gnit.

1

5 Attorney for WORK DEFENDANTS II

David A. Giannotti A PROFESSIONAL CORPORATION

2

3

UNITED STATES DISTRICT COURT

325 North Maple Dri~re, Suite 205 Beverly Hills, CA 902 10 (3 10) 385-1 3 18; Facsimile (3 10) 275-4097

CENTRAL DISTRICT OF CALIFOEWIA

UNITED STATES OF AMERICA, et al., ) Case Ro. CV 91-6520IH MRP (Fx) )

Plaintiffs, 1 ) DECLARATION OF DAVID A. GIANNOTTI

VS. )

CHEVRON CHEMICAL CO., et al. 1 1

Defendants. 1

I, David A. Giannotti, declare as follows:

1 . I am an attorney at law, licensed to practice before all the courts ofthe State of California,

including the United States District Court for the Central District of California.

2. I represent the "Work Defendants" in this action.

3. I have personal knowledge of the following facts:

INTRODUCTION

4. On December 5,2008, the United States Environmental Protection Agency ("EPA") sent

me a letter, a copy of which is attached as Exhibit 1, "formally" demanding payment of its alleged

oversight costs for the Thermal Destruction Facility ("TDF") item of Excluded Work under CD-3 and

invited the Work Defendants to invoke dispute resolution.

5 . On January 5,2009. I. on behalf of the Work Defendants. responded with a letter, a copy

of which is attached as Exhibit 2.

6. EPA and the Work Defendants (collectively the "Parties") agreed the January 5, 2009

letter was effective January 12,2009. Attached as Exhibit 3 is an e-mail I received from EPA confirming

this agreement.

7. The January 5,2009 letter invoked informal dispute resolution, pursuant to CD-3, Section

XXl1.B. All further "Section" references will be to CD-3, unless otherwise noted.

8. Informal dispute resolution did not resolve the dispute.

9. Pending the resolution of this dispute, the Work Defendants paid the amount EPA claims

into a separate interest bearing account.

10. Attached as Exhibit 4 are two e-mails I received from EPA, confirming it gave the Work

Defendants an extension to February 20, 2009, to submit their written statement of position.

1 1 . In addition to invoking formal dispute resolution, the Work Defendants request the

opportunity to meet with the EPA Director of the Hazardous Waste Management Division after the EPA

submits its statement of position and before EPA issues its final administrative decision.

FACTUAL BACKGROUND

A. Correspondence Predating CD-3 Supports the Work Defendants' Position

12. Attached as Exhibit 5 is a copy of a January 18,1991 letter from EPA to me setting forth

EFA's proposal for further negotiations of the terms of what became CD-3.

B. CD-3 and Its Relevant Provisions Support the Work Defendants' Position

13. The Court granted the EPA's motion to enter CD-3 on March 30, 1992.

14. It is important to note EPA drafted CD-3.

C,. Post CD-3 Correspondence and Conduct Supports the Work Defendants' Position

15. Attached as Exhibit 6 is a copy of a June 6, 1995 letter from EPA to Ken Hewlett. Mr.

Hewlett worked for New Cure, Inc. ("New Cure"), the Work Defendants' Project Coordinator.

16. Attached as Exhibit 7 is a copy of an April 27,2004 letter from EPA to Robert Butler of

New Cure.

17. Pursuant to the terms of the Eighth Partial Consent Decree ("CD-8") entered by the Court

on May 28,2002, EPA and the Work Defendants entered into a letter agreement on November 9,2006,

I / /

2 DECLARATION OF DAVID A. CIANNOTTl

regarding allocation and disbursement of certain hnds related to the Site, as defined in CD-3. A copy

3f the letter agreement is attached as Exhibit 8,

18. Attached as Exhibit 9 is a copy of a September 27,2007 letter from EPA to me.

19. Attached as Exhibit 10 is a copy of a September 30,2008 letter from EPA to me.

D. EPA's Interpretation of CD-3 Contradicts Its Plain Meaning

20. By the specific language in Section VIII.A.l.d, the Work Defendants agreed to pay

oversight costs for the North Slope of the South Parcel ('NSSP") item of Excluded Work. See ulso,

Section XVI1.C. 1, which specifically references this obligation. The Work Defendants' obligation to

reimburse EPA's oversight costs for the NSSP item of Excluded Work applies regardless of who

performs it. Pursuant to EPA7s request, the Work Defendants performed this item ofExcluded Work and

also paid EPA's oversight costs related to it.

E, Extrinsic Evidence Supports the Work Defendants' Interpretation of CD-3

21. In 1990, EPA issued Special Notice letters and a draft CD for the Gas Control and Cover

OU .

22. EPA sought construction of landfill cover. gas control, and construction of the TDF, plus

long term O&M.

23. There were no provisions for excluded work or cash out opportunities for PRPs.

24. The Work Defendants were the only PRPs that offered to do the work necessary to

implement the remedy, but they were no1 willing to do all of the work, nor pay all past costs or O&M

costs into the indefinite future.

25. After a period of negotiations, EPA revised its position, and offered excluded work,

provision for Cash Defendants, and limited the period of O&M. See, Exhibit 5.

26. EPA's position as of January 18, 1991 also proposed that Work Defendants pay all

oversight costs for design of construction and five years of O&M, pay $20 million in past costs, and

several other specified conditions. See, Exhibit 5.

27. This restarted negotiations, and within the next few months, an agreement in principle was

reached that was reduced to draft CD language by EPA and ultimately to the final CD-3.

/ / /

-I DECLARATION OF DAVID A. GIANNOTTI

28. This agreement in principle provided the Work Defendants had to pay oversight costs for

the NSSP but not the TDF or North Parcel.

29. The Work Defendants would pay the first $16 million of oversight costs, then all such

costs over $21 million, thus creating a $5 million gap that remained EPA's responsibility.

30. This latter provision is found in Section XV1I.C.

F, EPA's Accounting of its Oversight Costs is Questionable

3 1 . To date, the EPA has not provided a complete accounting of its requested oversight costs.

I declare, under penalty of perjury, under the laws of the United States of America, that the

foregoing is true and correct.

Dated: Febniary ,2009 IS

DECLARATION OF DAVID A. GIANNOTTI

EXHIBIT I

Via Mail and E-Mail --

UNITED STATES ENVIRONMENTAL PROTECl'lON AGENCY REGION IX

76 Hlwthorrn Street San Fnncl#xr, CA 94105

g p ~ d - , l - d 90 /

David A. Giannotti, Esq. David A- Giannotti, P.C. 425 N. Maple Drive Suite 205 Beverly Hills, CA 90210 E-Mail: [email protected]

Mary Ever PresidentProject Coordinator New Cure, Inc. 2250 Gretnwood Avenue Monterey Park, CA 91755 E-Mail: [email protected]

Re: Oversight Costs at the Operating Industries, hc . ("ODT') Superfund Site

Dear Mr. Giannotti and Ms. Esper

As you know, on September 27,2007 and on September 30,2008, the United States E~~vironmental Protection Agency ('EPA") sent to New Cure, Inc. ("NCI"), acting as the agent for your clients, the Operating Industries, Inc. ("Oil") Work Defendants, bills for the EPA's Oversight costs,related to the Work and Excluded Work being performed by your clients, through NCI, pursuant to OD's Third Partial Consent h r c e ("CD-3")' as those terms are &fined therein. In letters dated November 14,2007, and November 5,2008, NCT's President, Mary EEpcr, indicated that your clients refused to pay that portion-of the EPA's Oversight costs related to the Thermal Destruction Facility ("TDF'). By this letter, the EPA is formally demanding payment of those Oversight costs.

The EPA believes that CD-3's provisions an clear, when read as a whole, that the Work Defendants are obligated to reimburse the EPA for its TDF and North Parcel ("W) Oversight costs. Paragraph VIED of C'D-3 provides, in relevant part, that "if Work Defendants perform an item(s) or portion of Excluded Work, all references in this D&rree to Work shall be read to apply ta that item(s) or portion of Excluded Work . . . ." Paragraph XM.C.1 of CD-3 goes on to detine the scope of the Wprk Defendants' responsibility to pay EPA's CD-3-related Oversight

Mr. David A. GiannottiRrls. Mary Esper December 5,2008 Page 2

costs. This latter provision, for its part, states that 'Work Defendants shall reimburse EPA's Wardous Substance Superfund for the oversight costs incurred by the United States under this Decree for Work . .; ."

Considered togher , as requind by Paragraph WID, Paragraphs VIIILD and XW.C make clear that the refcrence to 'Work" in Paragraph XVILC.1 must be read to refer to the TDF and NP Excluded W o k items if, and to the extent that, they art performed by the Work ~efendants. Stated differently, adherence to Paragraph VIILD's requirements means that Paragraph XVILC.1 must be read as though it says: 'Work Defendants shall reimburse EPA for Oversight costs in relation to Work and, by virtue of Paragraph VIED, each item of Excluded Work, to the extent performed by the Work Defendants." As the Work Defendants have performed or are performing the TDF and NP Excluded Work items, Paragraph XVILC.lls reference to the Work Defendants' obligation to pay EPA's Oversight casts for WOW must also be read to nfer to EPA's Oversight costs for the TDF and NP Excluded Work items.

In verbal cornmu~ucations with Eric Esl& of EPA's Office of Regional Counsel, you have made clear that your clients believe Patagraph XVaC.l's specific reference to the Work Defendants' obligations to pay Oversight costs for the CD-3 Excluded Work on the North Slope of the South Parcel ("NSSP"), and contsponding lack of reference to CD-3's TDF and Excluded Work items, indicate that CD-3 did not contemplate that the Work Defendants would pay EPA's Oversight costs for the l a m two items of Excluded Work. EPA disagrees.

The character of the work associated with the diffemt elements of 0-3's Excluded Work explains the referential disparity in Paragraph XVILC.1. The express reference to NSSP Oversight costs was included to address EPA's concern that it would be extremely difficult, if not impossible, to track EPA's NSSP Oversight costs separately from its CD-3 Work Oversight costs because implementation of those two elements of the remedial action would be so closely interwoven. EPA therefore negotiated for the inclusion of a separate, express reference to NSSP Oversight costs in Paragraph XVILC.1 to make clear that the Work Defendants wen responsible for these costs regardless of whether they performed the NSSP Excluded Work. This requirement made it unnecessary to mck the NSSP Oversight costs separately in the event that a party other than the Work Defendants performed the NSSP Excluded Work item.

By contrast to the situation with the NSSP Oversight costs, EPA was not concerned about sepgating the TDF and NP Oversight costs from CD-3 Work Overnight costs because the TDF and NP Excluded Work items are discrete projtcts from the CD-3 Work. Had EPA asked another party to perform the TDF andlor North PaFcel Excluded Work items, EPA readily could have tracked and sought recovery of its TDF andlor NP Oversight costs from that other party or, if that failed, could have recovered its TDF and/or NP Oversight costs from the CD-3 Cash Escrow Account pursuant to Paragraph ?MIID. As thee was no need to ensun that the work' Defendants would pay the TDF andlor NP Overnight costs regardless of who performed the work, there was also no need to reference these costs separately in Paragraph XVTLC.1. If

Mr. David A. Gimotti/Ms. Mary &per December 5,2008 Page 3

another party performed the TDF andlor NP Excluded Work, that party would pay the Oversight costs associated with those items of Excluded Work. If the Work Defendants pcrfonned them, rhey would bt treated as Work pursuant to Paragraph WED, and the Work Defendants would pay them.

Based on the interpretation and understanding of CD-3 presented above, the EPA hertby disagrees with the OII Work Defendants' refusal to pay EPA's TDF Oversight costs and demands remittance of payment within 30 days of receipt of this letter. As set forth in the letters dared September 27,2007 and September 30,2008, the EPA's unnimbursed Oversight costs are $3 1 1,299.5 1 plus interest If the Work Defendants disagne, they have the opportunity to invoke dispute resolution pursuant to Paragraph XXU of CD-3.

If you have any questions or conccms related to this demand, please do not hesitate to contact me or Janet Magnuson, Assistant Regional Counsel, at 41 5-972-3887.

Sincerely,

Pre&rick K. Schauffler Chief, California Site Cleanup Section I Superfund Division

cc: Chris Lichcns Janet Magnuson Shiann-Jang Chern Greg Pennington Glenn Andenon

EXHIBIT 2

JAN 1 2 2009

2340 BELLA VISTA DRIVE MONTEClTO, CALIFORNIA 93108 TELEPHONE: (805) 695-1463 FACSIMILE: (805) 565-4822

DAVID A. GIANNOTTI A PROFESSIONAL CORPORATION

ATTORNEY AT LAW NEW CURE, INC.

davld9dagirnnottl.com /e l /pP4 4 - /2 75- C -

www.d~vldrglrnnot~i.com 425 N. MAPLE DRIVE. SUITE 205

BEVERLY HILLS, CALIFORNIA 90210 TELEPIIONE: (310) 385-1318 FACSIMILE: (310) 275-4097

January 5.2009

Frederick Schaumer Chief, California Site Cleanup Section I U.S. Environmental Protection Agency, Region IX 75 Hawhome Street, MS - ORC-3 San Francisco. CA 94 105

Re: Opcritittg Industries, Inc. Superfund Site (OH) Subj: O v e r . ~ i f i ~ COSIS a1 OII

Dear Mr. Schaufller:

1 am writing on bchalf of the Work Defendants under the Third Panial Consent Decree (CI)- 3). Pursuar~t to Scctioll XXII. Dispute Resolution of CD-3. [he Work Defelrd$n[s hereby provide written noticc to EPA thnt a dispute has arisen due to EPA's demand for payment of its oversiglj~ costs for the Thermal Dcstn~ction Facility (TDF) item of Excluded Work, as set forth in EPA's letter of December 5, 2008. to Mary Esper and me, as Project Coordinator and Con~mon Counsel, respectively. for the CD-3 Work Defendants. As provided in paragraph XXI1.B o f Section XXII. the Work Defendants request informal negotiations to attempt to resolve tlic dispute.

Paragraph XV1I.C. I . of Section XVII. Reimbursement of Response Costs required the Work Dekndants to pay oversight costs for the Nonh Slope of the South Parcei itan of Escluded Work only. There is no reference in Section XVll that Work Defendants are required to pay oversight costs for the TDF or Nonh Parcel items of Excluded Work. However, paragraph XV1II.D of Section XVIII. Escrow Account. specifically provides that the Cash Escro\v Account is the source for payments to EPA for oversight costs not paid by Work Defendants under paragraph XV1I.C of Section XVII. Thus. €PA is enti~led to be reimbursed for any oversight costs for the TDF or Nonh Parcel from the funds in the CD-3 Cash Escmw Account. EPA's current position appears to be based entirely on its interprcwtion of tllr language in paragraph VII1.D. u i Section VIII. Excluded Work, that any item of Escludrd Work performed by the Work Defendants at EPA's request becomes Work. EPA has now decided that this paragraph really mcans that i t reverses the specific provisions i n Section XVll and XVlfl that explicitly deal wilh oversight cons.

Essentially, EPA's posi~ion, as set forth in its Deccmber 5, 2008 letter. is that general lauguage in CD-3 is to be interprc~cd to change the intent of specific language of 0 - 3 . EPA goes a step hnhcr arid provides new languayc in the Deccrnber 5,2008 letter to suggest now what EI'A must have rally incant by paragraph XVII.C.1 when it was drafted and ncgotiautd in 1991, and tlien entered by Ihe coun as CD-3 in 1992. To the contrary, a reading of all of Scctioii VIII. specifically including

GXlAWClien~lVLcttsa 2009n:. Schulflla, EPA (Find) OIE05/09

Fred Schaumer. EPA. Region 1X January 5.2009 Page 1

paragraphs VIII.B., VII1.C.. and VII1.D.. shows tha~ the key focus is on responsibility to Iiieet f'erformance Standards as defir~ed in CD-3. with the provisions of VIl1.D. to make it clear that any bicluded Work performed by thc Work Defendants is to be deemed Work for purposes of mecting the Performance Slnndards. As bath EPA and [lit Work Defendants interpreted slid operated in a manner consistent with the Work Defendants' rncaning and interpretation since 1992. and no cffon we5 ever made by EPA lo collcct ovcnigllt cons for the TDF Fxcluded Work. let alone any communications or stalemcnt that sucli costs wcre lo be paid by Work Defendants, prior to the current efforts, it seems both u~irealis~ic and unreasonable for EPA to now assert that its ncw interpretation has any validity.

The Work Defcndants stnlid ready to Inerr with €PA informally to rcsolve this dispute, and propose a meeting on January 13. 2 1 or 22. Please let me know if any of these dates would work for a meelink or propose alternatives.

Thank you for yaur cotisidcration.

Very Truly Yours. , .

David A. Giannotti. Esq. David A Gianno~i. A Professional Corporation

cc: Glcnn Anderson C m p Bertclsen Shiann-Jang Clicrn Eric Esler Chris Lichens Janet Mapuson Tcdd Yargcau, DTSC Chief. Environnicnral Eliforcement Scctio~l - DOJ

C-/DAWiaKMVLctlur 1009fi. Schwflla. EPA (Final) O l l O W

EXHIBIT 3

From: [email protected] [mailto:[email protected]] Sent: Monday, January 12, 2009 6:04 PM To: David A. Giannotti Cc: [email protected]; Li&ens.Chnstopher@epamail,epa.pv; [email protected]; Anderson, Glenn R; Magnuson [email protected]; Shelbymeresa Moore; [email protected] Subject: Re: NV: 1/5/09 letter To Fred Schauffler

David,

Thank you for this notification that the 011 CD-3 Work Defendants are invoking the dispute resolution procedures of CD-3. Pursuant to your request, we are considering the dispute effective as of today, January 12, 2009. Therefore, by our calculations, the 20 day informal negotiation period described in CD-3's Section XXII.B.l will expire on February 1,2009. Please advise us of how you propose we proceed during this informal negotiation period.

As we move forward under this dispute and any future disputes, please assure that you, Shelby, Corey, and any other personnel paid by the 011 Work Defendants in whole or in part with funds from the 011 escrow or special accounts accurately account for and completely segregate the time you spend on the dispute(s) from the lime you spend which is "closely tied to the actual cleanup." Key Tronic Corn. v. United States, 51 1 U.S. 809, 820 (1994). The 011 Work Defendants' legal and other costs related to disputes cannot be paid with funds the use for which is restricted to "necessary costs of response," as that term is used in Section 107(a)(4)(B) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C.S. 9607(a)(4)(B). The U.S. Supreme Court's holding in Key Tronic makes clear that costs the 011 Work Defendants incur "primarily protecting [the Work Defendantj's interesls as ... defendant[s] in the proceedings that established the extent of [their] liability ... do not constitilte 'necessary costs of response' ...." M.at 820-821.

As you know, and as Corey and Glenn certify, all of the funds in the 011 escrow and special accounts, and thus all of the funds authorized for release by EPA via the 9 month projection and reimbursement processes, are restricted for reimbursing andlor paying "necessary costs of response." Therefore, the 9 month projection and Exduded Work reimbursement requests should not include any of the 011 Work Defendants' costs related to this or any dispute at the site. Those costs must be paid with other monies.

If you have any questions or concerns about the above, please do not hesitate to contact me or Janet Magnuson.

Many thanks,

Thomas Thomas 8. Butler Assistant Regional Counsel U.S. Environmental Protection Agency, Region IX Office of the Regional Counsel (ORC 3) 75 Hawthorne Street San Francisco, California 941 05

Direct Dial: (41 5) 972-3869 Fax: (41 5) 947-3570 Email; [email protected]

EXHIBIT 4

From: [email protected] [mailto:[email protected]] Sent: Monday, February 02, 2009 4:42 PM To: David A. Giannotti Cc: [email protected]; Lichens,[email protected]; [email protected] Subject: Re: Project Management MeetingmF oversight dispute

David, €PA agrees to allow an extension of time to February 20,2009, for you to file a formal dispute notice. Additionally, Chris left me a message that he is available for the Project Management Meeting this Thursday at 1:00 pm, and that time works for Thomas and me.

Janet

From: [email protected] [mailto:[email protected]] Sent: Monday, February 02,2009 304 PM TO: David A. Giannotti Cc: [email protected]; [email protected]; [email protected]; ChernShiann- [email protected]; Shelbymeresa Moore; [email protected] Subject: 011: Deadline for Invocation of Formal Dispute Resolution Over TDF Oversight Costs Moved to February 20, 2009

David,

1 just received confirmation from EPA's Superfund Program that, in light of your personal circumstances, EPA is amenable to granting the 011 CD-3 Work Defendants until February 20th, 2009 to invoke CD-3's formal dispute resolution provision* pursuant to Paragraph XXII.B.2. of CD-3.

EPA has asserted that the 011 CD-3 Work Defendants are liable pursuant to the terms of CD-3 for Future Oversight Costs related to the Thermal Destruction Facility item of Excluded Work described in Paragraph VlllA.2. EPA has made a demand of the 011 CD-3 Work Defendants for payment of some of those costs. EPA and the 011 CD-3 Work Defendants unsuccessfully attempted to resolve informally the dispute.

On or before February 20, 2009, therefore, the 011 CD-3 Work Defendants must submit to EPA a written statement of position justifying why the 011 CD-3 Work Defendants should not be liable under the terms of CD-3 to pay EPA's Future Oversight Costs related to the Thermal Destruction Facility item of Excluded Work. If the 011 CD-3 Work Defendants fail to submit this statement of position on or before February 20, 2009, Paragraph XXII.B.2 of CD-3 mandates that EPA's position becomes binding and the 011 CD-3 Work Defendants are liable without further process for payment of EPA's Future Oversight Costs related to the Thermal Destruction Facility item of Excluded Work.

As you know, EPA believes that the CD-3 Future Oversight Cost liability analysis is the same for both the Thermal Destruction Facility item of Excluded Work, described in Paragraph Vlll.A.2, and the North Parcel item of Excluded Work, described in Paragraph VII I .A.3.

As a reminder, and to reiterate what I explained in my email to you on January 12, 2009, the 011 CD-3 Work Defendants' legal and other costs related to any phase of this dispute cannot be paid with funds the use for which is restricted to "necessary costs of response," as that term is used in Section 107(a)(4)(B) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C.S. 9607(a)(4)(B). All of the funds in the 011 escrow accounts are so restricted.

If I have misrepresented anything above, or if you have any questions or concerns related to this message, please do not hesitate to contact me or Janet Magnuson.

Thanks,

Thomas Thomas B. Butler Assistant Regional Counsel U.S. Environmental Protection Agency, Region IX Office of the Regional Counsel (ORC 3) 75 Hawthorne Street San Francisco, California 941 05

Direct Dial: (41 5) 972-3869 Fax: (41 5) 947-3570 Email: butler.thomas@e~a.aov

EXHIBIT 5

UNITED STATES ENVIRONMENTAL PROTECTION AQEHCY 9' REOION l X

76 Hawthoino Stront

Ssn Frsnclrco, Ca. 04106

18 January 1991

CONFIDENTIAL : SETTLEMENT NEGOTIATIONS

Via T e l e f p ~

David Giannotti, E s q . Kaye, Scholer, Pierman, Hays & Handler 1399 Avenue of the Stars S u i t e 1600 LOB Angtles, California 90067

Re: Operating I n d u s t r i e s Inc. Superfund S i t e yeuot a L o i z s for the Gas Cover 0-ble TJrrit

Dear David:

As a result of our continuing discueaions, we are willing to propose the following structure for settlement. We believe that this proposal addresses your concerns that t h e Stearing committee not be responsible for 100% of the remedy and that othero participate as well.

Under this proposal &PA agrees to aesume responsibility for a substant ia l port ion of t h e work, from which the Steering committee defendants are released. Since there are few s i g n i f i c a n t viable parties who are not represented by the Steering Committee, EPA is thereby assuming a s u b s t a n t i a l risk t h a t t h e costs o f these portions of t h e work will be borne by the hrjeilcy itsel'f. A s a result, t h i s proposal is structured to provide an incentive f o r other parties to participate.

For t h i s reason, it is important that the steering Committee understand that t h i s o f f e r sets forth our best opportunity to reach a conseneus for se t t l ement . As a way to reach a settlement t h a t meets t h e 011 Steering Committee's concerns and that does not present an unacceptable level of risk to the government, we have excluded entirely from t h i s . s a t t l e m e n t any agreement for operations and maintenance (O&M) for year G to.the future . T h i s 0&M w i l l be addressed at t h e rime of final site remedy.

David Giannotti 18 J a n u a r y 1991 Page 2

The OII Steering Committee defendants will agree to:

- Design and construct the selected remedy for t h e e n t i r e South Parcel, with certain excluded matters, and to negotiate with EPA for appropriate language in the SOW concerning t h e NSSP. The excluded matters are the design and ~0nstr~ction of a thermal destruction facility and the provision of the materials for vegetative so i l layer.

- Meet all performance standards.

- Conduct South Parcel O&M for the years of canstmction and f o r three years after attainment of performance stanaards, /- -- --

- Pay all EPA oversight costs during the design and construction and f i v e years of the O&M.

- Cooperate with EPA to develop a casn Escrow fund from non- Steering Committee members and pay $20 million to that fund.

- cooperate with EPA for the inclusion of non-Steering conmittee members on a cash basis into thie settlement.

- Agree to perform o&M for years 4 - 5 if EPA determines that rhc use of fund^ from the account i s appropriate for thet t a s k .

EPA will agree to covenant not to sue the settling Qelendants f o r t h e following mattars, subject to any appropriate rcoponors:

- The design and construction of the South Parcel sys tems , including the excluded matters and all other work or materials performed pursuant to any administrative order.

- The design an6 construction of the North P a r c e l systems,

- The operations and naintenance of both systems for the f ive year period after attaining performance standards.

- state and Federal past costs.

- SPA ove r s igh t for period of design, construction and five years operations and maintenance.

EPA and the Steering committee wibl'agree that the Cash EBCZOW account funds may be used, at EPA discretion, for:

- State and Federal p a s t coste.

David Giannotti 18 January 1991 Page 3

- Work or m a t e r i a l s at the site to ba provided by EPA, including but not limitea to the thermal destruction facility, vegetative soil layer.

- Other work or materials i n c l u d i n 9 but not limited to synthetic materials for cover.

- N o r t h parcel design, conatruction'and maintenance.

- Other site remediation including operations and aaintenance.

As I am sure you are aware, the moratorium period will shortly come to an end. We hope se may reach an agreement on the above, so that we may turn to negot ia t ion of the Consent Decree language In the near future. We look forward to your response amd to meeting w i t h you on January Z l s t to discuss these matters.

Very truly yours,

Katherine L. Shine Assistant Regional Counsel

cc: Dennis Ragen (CA) Robert Brook (DOJ)

EXHIBIT 6

* . .. _ . .

UNITED STATES ENVIRONMENTAL PROT ECTlON AGENCY REGION 1X

75 Hawthorne Street San Francisco, CA 941 05-3901

& ~ , & J U - * - ~ 3 9 7

Via Federal Express Airbill #3422677613

June 6,1995

Mr. Ken Hewlett Project Coordinator New CURE, Inc. 2550 Greenwood Avenue Monterey Park, CA 9 1755

Subject: Third Partial Consent Decree for the 011 Site Thermal Destruction Facility Item of Excluded Work Fourth Partial Consent Decree for the 011 Site

Dear Mr. Hewlett:

Under the terms of Section VIII.E.1 of the Fourth Partial Consent Decree, and Section VII1.E of the Third Partial Consent Decree, "sufficient funds" are available in the CD-3 Cash Escrow Account to provide payment to the CD-3 Work Defendants for up to the first $6 million of work costs incurred by the CD-3 Work Defendants for the TDF item of Excluded Work. Pursuant to the terms of Section W . C . of the Third Partial Consent Decree (CD -3), EPA hereby requests that the CD -3 Work Defendants perform the Thermal Destruction Facility (TDF) item of Excluded Work.

As provided in CD-3, the TDF item of Excluded Work shall be considered Work under CD-3 and the CD-3 Work Defendants shall be responsible for attaining Performance Standards pertaining to the TDF.

As we have discussed, it may be possible for the Work Defendants to satisfy the requirements for the submittal of management plans for the TDF work by amending existing CD-3 management plans instead of developing new management plans. EPA suggests that this approach may be more cost-effective and result in reduced administrative burdens for all-parties. I would be happy to discuss this possibility with you at our earliest mutual convenience.

* .'

EPA is currently completing a report entitled Evaluation of Candidate Locations for the Planned Thermal Desmction Facility at the 011 Landfill Supelfund Site. This report will be sent to you for your information and use later this month. The report will also be provided to the 011 Interagency Committee and to the public information repositories at that time.

Letter: Hewlett June 2,1995

Page 2

EPA looks forward to assisting you in expediting the design and construction of this facility. If you have any questions, please feel free to call me.

Sincerely, , EPA Proiect Coordinator - 011 Site Third ~ & a l Consent D e c m

cc: Project Co-Chairmen c/o Boone & Associates David A. Giannotti, Esq. Scott Brown, Environmental Solutions, Inc. 011 Project Coordinator (First Partial Consent Decree), CURE, Inc. OII Project Coordinator, CAL EPA DTSC Assistant Regional Counsel - OII Site, EPA 011 Project Coordinator (First Partial Consent Decree), EPA Jill Bensen, CH2M Hill

011 Project Coordinator (Fourth Partial Consent Decree), Boone & Assoc. 011 Project Coordinator (Fourth Partial Consent Decree), EPA Robert Brook, U.S. DOJ

Jim Starnbolis, Chevron Rajeev Sane, UNOCAL

OII Inter-Agency Committee: Bookman-Edmonston Engineering, Tom Regan CA DOJ, Attorney General's Office, David Eissler CA Integrated Waste Management Board, Darryl Petker CA Regional Water Quality Control Board, Rod Nelson California Department of Justice, Dennis A. Ragen California Department of Transportation, Ralph Thunstrom California Division of Oil And Gas, Ed Brannon City of Montebello, Clark Siegmeyer City of Monterey Park, City Engineer City of Monterey Park, City Manager City of Monterey Park, Mayor County Sanitation Districts of Los Angeles County, Roben Miele, Ann Heil LA County DHS, SWM, BEP, Richard Hanson LA County DPW, Waste Management Division. Men Ramos Los Angeles County Counsel, Judith Fries SCAQMD, Brian Choe

EXHIBIT 7

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX

75 Hawthorne Street San Francisco, CA 94105

April 27,2004

Mr. Robert Butler Vice Chair - NCI Board of Directors C/o New Cure, Inc. 2550 Greenwood Avenue Monterey Park, California 9 1755

Subject: North Parcel RedeveIopment and Remediation North Parcel Item of Excluded Work Under Third Partial Consent Decree Operating Industries, Inc., Superfund Site

Dear Mr. Butler:

I am writing this letter to summarize the status of our discussions regarding the Operating Industries, Inc. ("OD") Superfund Site. I am also fulfilling our commitment to you and to the City of Monterey Park ("City") to initiate remediation work for the North Parcel of the OII Site, in conjunction with your stated commitment to integrate that remedial work with preparations for development of the North Parcel.

For the better part of a year, EPA has been focused on its twin goals of cleaning up the Nonh Parcel. and effectively integrating that work with the efforts of the City to redevelop the North Parcel. We have attempted to accomplish these goals through intensive discussions with the 011 Site Custodial Trust ("the Trust") and with representatives of the potentially responsible parties at the 011 Site (the "Work Defendantsn).

In December 2003, we held a conference call and came to agreement on several issues that formed the basis for the Work Defendants to'move fonvard with integrating remediation and redevcloprnent of the North Parcel. Elizabeth Adarns documented these agreemenls and the proposed course of action in a letter dated December 19,2003. Since that time, we have been negotiating the details of these agreements and EPA has worked very hard to satisfy the many concerns of the Work Defendants and the Trust.

In early April, EPA believed that negotiations were nearly concludcd. On April 14, 2004, EPA made a proposal to the Work Defendants to resolve the outstanding issues. EPA's proposal addressed every point under discussion and reflected our major financial concessions, including

the distribution to the Work Defendants of the bulk of the anticipated proceeds of sale from the North Parcel. In an effort to resolve the last few issues raised by the Work Defendants EPA proposed an additional financial incentive to cover any other potential costs that may relate to the sale of the North Parcel.

On April 19, EPA attended a meeting hosted by the City and the Work Defendants. The Work Defendants in that meeting did not respond to EPA1s offer, but instead announced their decision to "change course." The Work Defendants withdrew from negotiations and described a three-point plan that they said would accelerate the resolution of the issues. As EPA understood it, the Work Defendants proposed to: (1) Move quickly to resolve the pending litigation; (2) Ask EPA to issue a letter requiring the CD-3 Work Defendants to initiate the North Parcel work, while continuing to work with Home Depot and the City to voluntarily integrate remediation and redevelopment; and (3) Initiate the dispute resolution process with EPA under the terms of CD-8, to assert the Work Defendants' position on the appropriate distribution of the proceeds of sale.

EPA understood the Work Defendants to commit unequivocally to integrate the CD-3 North Parcel Excluded Work with the City's redevelopment effort. h response to the request of the Work Defendants, EPA committed to the Work Defendants and the City to issue a letter initia.ting the CD-3 North Parcel Excluded Work item within two weeks, or no later than May 3, 2004.

On April 23, EPA and the Work Defendants held a telephone conference to further discuss the Work Defendants' new three-point plan. In this telephone call, EPA heard a different exulanation of the Work Defendants' position. Contrary Lo what we heard on April 19, you indicated that integrating the remediation of the North Parcel with redevelopment would be contingent on a resolution of the allocation of proceeds from the sale of the property. We are awaiting a fuller written explanation of the Work Defendants' position on this point, which you promised to provide next week. However, in this telephone conference the Work Defendants again expressed their willingness to proceed with the North Parcel work as CD-3 Excluded Work under a letter to be issued by EPA.

Accordingly, by this letter, EPA is fulfilling its commitment to require the implementation of the CD-3 North Parcel Excluded Work. Under the terms of Section VIII.E of the Third Partial Consent Decree, "sufficient funds" are available in the CD-3 Cash Escrow Account to provide payment to the CD-3 Work Defendants for up to the first $6 million of work costs incurred by the CD-3 Work Defendants For the North Parcel item of Excluded Work. Pursuant to the terms of Section VU.C. of the Third Partial Consent Decree (CD-3), EPA hereby requests that the CD-3 Work Defendants perform the North Parcel item of Excluded Work.

As provided in CD-3, the Nonh Parcel item of Excluded Work shall be considered Work under CD-3 and the CD-3 Work Defendants shall be responsible for attaining Performance Standards pertaining to the North Parcel.

EPA strongly encourages the Work Defendants to fulfill their commitment to the City and EPA to integrate the redevelopment into the remediation design.

Sincerely,

Keith Takata Director, Superfund Division

cc: David Hirsh, OII Trust Shelby H. Moore, Jr.; David A. Giannotti, Esq. Chris Jeffers, City of Monterey Park

EXHIBIT 8

-:. bP ', UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

'5 i.s%zj . . . - REGION IX a. .'& * % ' 75 Hawthorrie Street

San Francisco, CA 94105-3901

l>;t~iJ :I. Gianno~ri. Esq. Q T ~ J L - C S oi' Da\.icf :I. C;i:~nnolli \V:ii~ 1'I:i~a 1925 Ceniul-_\ Park E:cst. Suitc 950 I.,os :lngelcs. C:II i l'olni:~ 90067

SL'BJ: Operaring fndu~ll-ics. Inc. S~ipc.r?'urld Silt - 1,ciler .-\grrcrncll~ Ile~al.ilin_p Ccrtal~i Prtymrn!~ 10 thc ii'ork DetictlJ3nts PL~S.<~I~III r,, the EtgI11 I1 Parti al Ccbnsent I>ccrcc

1 \\-riku t o LC[ forth [he agccrni'ril ~ C I N C C I I ~ h c U.S. E!I\ i~-ollti~crl~;ll I"rokclioi~ Xsency ("EP:J", ;lncl. si)llccti\:c.ly and indivitiually. illc: \$!or-k Defcnd:ul~s ro ~ h c Eighth P:lni:lI conscnr l ~ s c r r c ior tlw Optrating Inclustrics. I n i . Supel.iunrl Sire ;IS this 1cm1 is clrl'incd 11; tile Dccrcc ("lhc ('D-S \irorl; 13sfcndants"). c o ~ ~ ~ c l - n i n g tlic illlncution arid C ~ ~ S ~ U ~ - S C I I I C I I I . pulsLlitnt IO tlw -. I:lzhth - Pminl Con::ent 1)ecl.i.e ("TTI-S"i 1;)r tllc Gpcl-;iting Inilu~~~.irs , Ins. SiipcrCund Site ("OII" or. "Sitr.") t d cc11ain I'unils ~.cl:~rcd ti) th i : site.' :IS 1nw.c spccificillly dcsclihccl hr~.cin.

-. I hc 190-acl-c Siic is :I !'i)rnicr Iandf~ll loci~lcd ~pprissinI;llc.ly I f ) niilcs a s [ ol'd~nintcn~r! L.as -1ngelc.;; in l.l(1nrc1.c.y Park. Calihmi:~. Thc. Innilfill is disiclcil inlo :I 45-:tcre ncrrrhcr-n p;il.ccI c"Sc!nh Parcel" 1 nld a 145-acre si?u~'nei-r~ par-ccl ("South P:i:'ccl"~ b!' 111t Po~nctna Fl-ecn ;I

inajar cornnluter. I l i~h~\ . i~y. l'lic Sc\~enrli Pani:lI Consen1 Dccrec for OI I ("CD-7") pro\.idccl Ihar GsecniicId .\,lonrc~.cy P;lr.E;. LI-C ("(;ic<nIiclii"). a bso\\mfictds dcvc.Ioj>inenl company. \\auld rcmeiliats ;I pol-rion of lhc So1.111 P:trecl dcsignarcd as [he '.Ds\eIol>mc!l~ P:lrccl" in CD:~. l'his rcmcdr;:tion i i . 3 ~ cilndii~anecl on Crrc-cnl'lr*ld pt~rclinsll~g 111~ Dc\clop~ncnr Pal-ccl by October 3 1 . 2002. C;r~'c'nl'icld (lid not con~plctc 1112 I I L I I ' C ~ ~ ~ S C 01' 111c D C V C I O ~ I ~ ~ C I I I 1';1rccl by [hc dcrrdlinc, and thc ri-rncdinrioii ant1 ~.cdc.\.ciol~rnc~ir 1)) Circ=niicld \vill nor proceed ;IS iinticipaied i n C1)-7.

! Par:~g~.apll Sl.K.S.2.(.7) ol C'D-6 pl.oviclcs, in ri;'le\ arlr p;u-r. r h ; ~ ~ " i h ~ :mounts deposi~cd 1 ~n rhc Fii'rh P;iniol Conscni Dccrcc Cash i~scroiv Accoun[ ("CD-5 l?~cro\+~"j] b!, 11ar1ic.s to the Scvcnrh Pr:st1~1 Ctrnscn~ Dzcrcc [sliall accrue ro the hcncfir of thc Crl-S 1i'nr.k Dcl'cndunts] only ro rhe cxlen[. if ally, l l i ;~! EPA has ;~grercl in \\:r-irirlg lo crcdir thr: 1CD-S] 1Vol.l; DcTcnrln~lu \\:i~h such I'r~nds." 'rhc C'D-8 \vi>rk I>efcndants \\.ill uti1i;t.c illr "C)II I:iighrli Pa11iaI Consenl Ilccl-ec E? ;c .~LI \~ Xccounl." "\\i~>rk" ac.cciun1. undcr P;t~~gr-aph XIX..,j. of CD-h' ( - - \ \ ! ( I I . ~ Trusl'' ) rcgafili~lg llic rcccipt oi' sach t'ullcls.

-2-

Lnstead, the Work Defendants to the Third Partial Consent Decree Tor OIl ("the CD-3 Work Defendants" and "CD-3") are currently remediating the Development Parcel under Paragraph V1II.C of the Third Partial Consent Decree for OH (''North Parcel Excluded Work"). The parties to this Letter Agreement agree that integrating the infrastructure requirements for redevelopment of the Development Parcel into tile remedial design for the North Parcel Excluded Work would be efficient and cost effective and would facilitate its sale. As set forth below, should the Development Parcel be sold, the proceeds of the sale will become available for allocation and disbursement pursuant to this Letter Agreement.

Pursuant to CD-7. the CD-7 Generator Group established the OII Site Custodial Trust ("Trust"). The Trust is charged by CD-7 with nlarketing and selling, for the maximum value, any property it receives, such as the Development Parcel. CD-7 requires the Trust to deposit the Net proceeds2 from any sale of the Development Parcel into the CD-5 Escrow within seven days of receipt? The Trust is currently engaged in discussions with prospective purchasers about the sale of the Development Parcel for construction of a shopping mall under the "alternate conveyance" provisions of CD-7, Paragraph X.B.6.d.

EPA has determined that allocation and disbursement of a portion of the Net Proceeds as provided below will provide a financial incentive to tile CD-8 Work Defendants to integrate the Development-Related Work (as defined in footnote 7) into the North Parcel Excluded Work and to encourage an early sale of the Development Parcel. EPA also has concluded that integration of the Development-Related Work into the remedial design and construction work and the sale of the Development Parcel will provide benefits to the United States in the form of earlier rein~bursement of its response costs at the Site and improved oversight of Development-Related Work to ensure that the redevelopn~ent work does not interfere wit11 or hinder or delay implementation of the remedy or impair the remedy's protectiveness.

11. Disbursement of Certain Fiinds

This Letter Agreement covers two categories of finds: A) monies previously placed in the CD-5 Escrow pursuant to CD-7;' and B) any Net Proceeds from the'sale of the Development parcel.'

'CD-7 defines 'Net Proceeds" as "the proceeds of any sales . . . [the OD Site Custodial Trust] . . . receives . . . net of any reasonable costs (including, but not limited to, any ad valorem or other taxes) incurred by the . . . Trust in connection with the ownership, lease, sale, or other conveyance of this [real or personal] property."

See. CD-7 Paragraph XII.A.2.c.(lO).

T h e "CD-5 Escrow" is the Cash Escrow Account established pursuant to the Fifth Partial Consent Decree for 0II ("CD-5").

'AS noted in footnote 1. the CD-8 Work Defendants intend to utilize the Work

-j-

A. Disbursement of FLIII~S Already In the CD-5 Escrow

Subject to the conditions set forth in Section III of this Letter Agreement, EPA will allocate and authorize the disbursement to the Work Trust, collectively, S900,OOO already deposited in the CD-5 Escrow pursuant to CD-7.

B. Disbursement of the Net Proceeds fiom the Sale of the Develovment Parcel

Subject to the conditions set forth ul Sectioi~ I5 of this Letter Agreement, EPA will allocate and authorize the disbursement of any Net Proceeds fiom the sale of the Development Parcel as follows:

1. First, to reimburse the United States for tlle following costs, in the following order of priority:

a. An amou~:t equivalent to the amount EPA authorizes to be disbursed fiom the CD-3 Cash Escrow Account to the CD-3 Work Defendants and other parties for performing the North Parcel Excluded Work and for other North Parcel remedial activities pursuant to CD-3;

b. EPA's "Interim OSN Response cost^;"^ subject to EPA providing an itemized cost summary report as required by CD-7, Paragraph XVD.N.2.a.

c. Oversight costs incurred by EPA for the North Parcel Exc!uded Work subject to EPA providing an itemized cost summary report; and

d. Costs incurred by the United States in connection with CD-7 access issues or "Development-Related work,"? and any other costs incurred by the United

Trust regarding the receipt of any hnds.

6 C ~ - 7 , Paragraph VII.2, provides: '"Interim OSN Response Costs' shall mean all costs incurred by the United States, including direct and indirect costs, paid in connection with the OSN RA Work between September 30, 1999 and the effective date of this Consent Decree, which shall also include those costs paid in co~u~ection with the work conducted under the OII Site Third Partial Consent Decree on the remedy for the North Parcel."

'"Development-Related Work" shall mean all actions related to integrating the development into the design and construction of the remedy selected in the Gas Control and Cover ROD, as amended September 28,1990 including, but not limited to, the North Parcel Excluded Work. Actions defined as "Development Related Work" include, but are not limited to: ( I ) design and construction activities necessary to prepare the Site for development; (2) itnplernentation of the cost estimating process set forth in the "Final Work Plan for CD-3 North Parcel Excluded Work" (as amended); (3) gradbg, retaining

States in connection with North Parcel remedial activities (whether performed pursuant to CD-3 or CD-7), s~~bjecl to EPA providing an itemized cost summary report.

2. Second, should any Net Proceeds remain after the United States is fully reimbursed for the costs described in Paragraph II.B. 1 above, paynients will be made to the Work Trust, for the following costs, in the following order of priority:

a. An amount equivalei~t to the costs incurred by the CD-3 Work Defendanrs. consistent with the National Contingency Plan, in performing the North Parcel Excluded Work prior to EPA's approval of the Excluded'Work Completion Report, as provided in Paragraph XLII.A.2 of CD-3, excluding those costs otherwise reimbursed to the CD-3 Work Defendants and other parties pursuant to CD-3;'

b. 5207,767.00, representing the amount EPA and the CD-8 Work Defendants have agreed is owed to New Cure, h c . ("NU') by Greenfield, The Ezralow Company, LLC or the Eclipse Development Group for Development- Related Work prior to November 1,2002, minus those amoullts that are reimbursed directly or indirectly through payment offsets or otherwise;

c. An amount equivalent to the costs incurred for Development-Related Work after November 1,2002 by the CD-3 Work Defendants, CD-8 Work Defendants, NCI, or by a special purpose entity created by the CD-8 Work Defendants or NCI, that are not reimbursed directly or indirectly through payment offsets or otherwise;

d.. The sum of $428,000, represenling an estiinale of die net present value of the CD-8 Work Defendants' expei~ses over twenty-seven (27) years for the operation, maintenance, and molliloring of the North Parcel remedial systems pursuant to CD-8; and

e. 20% of the litigation costs and settlement payments combined, up to S600,000.00, incurred by the CD-3 Work Defendants, the CD-8 Work Defendants, New Cure, Inc. and the OD Site Custodial Trust in:

walls, protective liners, and piles or other foundation requirements for buildings; and (4) design and construction of the South Parcel access road.

'CD-3, Paragraph V'III.E, provides that if the CD-3 Work Defendants meet the requirements of CD-3, they are entitled to paynent from the CD-3 Cash Escrow Account for up to the first $6 million of costs incurred for the North Parcel item of Excluded Work.

-5-

(1) The lawsuit captioned, Greerrjield Molifcrcy Pur-k, LLC v. Tlre Ezrulo\v Cot~rpa~iy, LLC, Los Angeles Superior Court, Northeast District, Case No. GC032925, or any successor therelo co~lcerning the same subject matter; and

(2) The dispute resolution process ordered by the United States District Court for the Central District of Califonlia, on or about June 7,2004, in the matter captioned Utriicd Siufes of America 1,. Operatir~g I~rditsrries, Itrc., Case No. CCV 00-08794 (Cwx), or other dispute resolution process related thereto concerning the same subject matter.

To qualify as litigation costs for purposes of this Paragraph II.B.Z.e, the costs must be incuned, paid and documented as required by Paragraph lD.B.4 below. To qualify as settlement payments for purposes of this Paragraph II.B.2.e, the payments must be made pursuant to a settlement agreement or a final judgment h l l y resolving the n~atters identified in Paragraphs U.B.2.e. 1 and 2, above, and must be documented as required by Paragraph III.B.4 below.

3. Third, should any Net Proceeds remain after the payments are made pursuant to Paragraphs I1.B. 1 and lI.B.2 above, to EPA and the Work Trust, as follows:

a. Of thc first S8 million of any remaining Net Proceeds, 20% lo EPA (i.e., up to $1.6 million) and 80% to the Work Trust; and

b. Any remaining Net Proceeds in excess of $8 million to the Work Trust.

III. Conditions

A. The allocation and authorization for disbursement of the S900,000.00 allocated to the Work Trust pursuant to paragraph I1.A of this Letter Agreement is conditioned on the close of the escrow for sale of the Development Parcel on terms approved by EPA pursuant to Paragraph JI1.B. 1 and 2. below.

B. The allocalion and authorization for disbursement of the funds allocated to the Work Trust pursuant to paragraph U.B of this Letter Agreement is conditioned on the occurrence of all of the following conditions:

1. EPA's approval pursuant to CD-7 of the terms and conditions ofthe sale or conveyance of the Developn~ent Parcel;'

9CD-7, Paragraph XII.A.l .f provides: 'Neither of the OII Site Trusts shall assign,

2. The close of the escrow for sale of the Development Parcel on terms approved '

by EPA pursuant to Paragraph m.B. 1 . above;

3. EPA's completion of an accounting and allocation of the funds in the CD-5 Escrow as provided in CD-8 ("CD-5 Accounting and Allo~ation");~~

4. For costs described in Paragraph lI(B)(?)(a) - (c) and e of this Letter Agreement:

a. EPA's receipt of written docunlentation of the expenditures for the costs and the CD-8 Work Defendants' written certification as to the accuracy of such expenditures and costs;

b. EPA's determination that the costs were incurred and documented consistent with the billing practices required for reimbursement of CD-8 Excluded Work.

- sell or convey my of the real property it receives . . . unless both of the following requirements are met: ( I ) the OII Site Trust submits a written report to the EPA describing the terms of the sale, assignment or conveyance and the manner in which those terms meet the requirements of this Consent Decree; and (2) the EPA informs the OII Site Trust proposing the sale, assignment or conveyance that it has detenined. in its sole discretion, that the terms and conditions of the sale or conveyance will; (i) facilitate, and will not in any way hinder, the performance of all remedial work on that property, and the operation and maintenance of that remedial work, and (ii) will require the grantee to comply with the provisions of Section XVIlI jlnstitutional Controls, page 125) to the same extent as the On Site Trust proposing the sale or conveyance would be required to comply with respect to the property the grantee is to receive."

"CD-8, Paragraph XD(.S, provides, in relevant part: "EPA currently is preparing an accounting of funds on deposit in the Fifth Decree Escrow as of July 1, 001, as provided in this Paragraph X1X.S. 1. The [CD-81 Work Defendants shall assist EPA in the preparation of the accounting pursuant to this Paragraph X I X . S , including providing assistance in obtaining the relevant documents and information requested by EPA. . . . . 4. Following completion of the accounting. . . EPA will deterniine the appropriate allocation of those finds between the Cash Escrow and EPA, and will send the accounting and the allocation to the [CD-81 Work Defendants. If the [CD-81 Work Defendants do not initiate a dispute challenging EPA's allocation with thirty (30) days of receipt of the accounting and allocation, EPA shall instruct the escrow agent for the Fifth Decree Escrow to transfer hnds to EPA in accordance with the accounting and allocation."

5. EPA's approval of the Construction Completion Report for the North Parcel Excluded Work, which report must be prepared and sublniiled pursuant to Sections 5.5.8 and 7.5.2 of the CD-3 Scope of Work.

C: Within 30 days of satisfaction of the conditions listed above in Paragraph III.A, EPA will authorize the disbursement to the Work Trust of the $900,000 set in fonh in Paragraph XI.A in accordance with the procedures set forth in the CD-5 Escrow Agreement. Within 60 days of satisfaction of the conditions listed above in Paragraph IIl.B, EPA will authorize the disbursement to the Work Trust of the amounts set forth in Paragraph n.B in accordance with the procedures set forth in the CD-5 Escrow Agreement.

IV. Waivers and Releases

A. The CD-8 Work Defendants, collectively and individually, hereby waive and release any light to a claim or claims they or their employees, agents, successors or assigns, may have to reimbursement fiom the United States for any costs incurred pursuant to CD-7, including Paragraph M.A.2.c.(lO) of CD-7, including any legal fees andlor payments made pursuant to any settlements or judgments, including:

1. The lawsuit captioned, Greeilfielcl Mo~iterey Pal-k, LLC v. Tile Ezralorv Conpar~y, LLC, Los Angeles Superior Court, Northeast District, Case No. GC032925, or any successor thereto concerning the same subject matter;

2. The dispute resolution process ordered by the United States District Court for the Central District of California, on or abour June 7,2004, in the matter captioned U~rited Sfares ofAnzerica v. Operatirig I~rd~rsfries, Irrc., Case No. CCV 00-08794 (Cwx) , or any successor thereto concerning the same subject matter; and'

3. Other lawsuits or claims filed by Greenfield, The Evalow Company, LLC, Eclipse Development Group, and their employees, agents, successors or assigns arising from or in relation to the "Option and Transfer Agreement between A.H.A.S., Lnc. and Greenfield Monterey Park, L.L.C. doing business as Greenfield Development" attached to CD-7 as Appendix D, including all subsequent amendments and modifications.

B. The CD-8 Work Defendants, collectively and individually, hereby waive and release any right they or their cmployees, agents, successors or assigns may have, pursuant to CD-8 Paragraph XIX.S.2.(3) or this Letter Agreement, lo dispute the allocation of the mounts deposited by CD-7 parties to the CD-5 Escrow.

C. The CD-8 Work Defendants. collectively and individually, hereby agree to indemnify the United States against any claim or fight the Trust, the CD-3 Work Defendants, the CD-7 Generator Group andlor their respective group members, employees. agents, successors or assigns. may have:

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1. To reimbursement from the United States for any costs incurred pursuant to CD-7 including any legal fees or payments made pursuant to any seltlemeilts or judgments concerning the matters identified in Paragraph IV.A.1 - 3, above; and

2. To deduct the costs referenced above in this Paragraph W.A. as '-reasonable costs" or otherwise, prior to depositing the Net Proceeds from the sale of the Development Parcel into the CD-5 Escrow pursuant to CD-7, Paragraph XII.A.2.c.(lO).

Except that the indemnification provided in this Paragraph N.C does not apply to the group members of the CD-3 Work Defendanrs and CD-7 Generator Group who have declared bankruptcy under the laws of the United States and, as determined by the United States in its unreviewable discretion, have provided the United States with a satisfactory waiver and release as part of a bankruptcy settlement with the United States.

V. Dispute Resolution

As noted above, the CD-8 Work Defendants may not dispute pursuant to CD-8, the crediting of CD-7 settlement monies pursuant to CD-8 Paragraph XTX.S.2.(3) or this Letter Agreement. However, the CD-8 Work Defendants, collectively, and EPA may dispute whether the other party has failed to meet a requirement of tltis Letter Agreement pursuant to the dispute resolution procedures set forth in CD-8.

VI. Limitation of S c o ~ e of Agreement

A. The matters addressed in this Letter Agreement concern only the Development Parcel. Iss~les related to the potential future sale andlor development of the North Parcel's "Remediation Parcel" andfor the "South Parcel," as these terms are defined in CD-7, are outside the scope of this Letter Agreement.

B. Nothing in this Letter Agreement Decree shall be construed to create any rights in, or grant any cause of action to, any person not a party to this Letter Agreement. Each of the parties to this Letter Agreement expressly reserves any and all rights, defenses. claims, demands, and causes of action which each party may have with respect to any matter, transaction, or occurrence relating in any way to the Site against any person not a party hereto.

VII. Signatories

The undersigned representative of the US. EPA Region LX Superfund Division certifies that he is fully authorized to enter into the terms and conditions of this Letter Agreement and to execute and legally bind to this Letter Agreement the U.S. EPA Region IX Superfund Division. The undersigned representative of the CD-8 Work Defendants certifies that he is fully authorized to enter into the terms and conditions of this Letter Agreement and to execute and legally bind to this Letter Agreement the CD-8 Work Defendants, collectively and individually. pursuant to the

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terms of the Operating Industries, Inc. Site Steering Committee Agreement of December 3 1 , 1986, as amended, a separate agrccnlenl between and among tlle CD-8 Work Defendants.

VLII. Term of Aereement: Reservation of Riehts

A. Sections I through V1 and Section IX of this Letter Agreement will expire and have no effect after December 31, 2009, unless prior to sich expiration:

1. The conditions set forth in Paragraphs m.B. 1 and 2 are satisfied; or

2. If the conditions set forth in Paragraphs II1.B. I and 2 are not satisfied by December 3 1,2009, but the Conslruction As-Built Report for the North Parcel remedy and integrated Development-Reiatcd Work (as this term is defined in rootnote 7, above) has been subrrritted to EPA by December 3 1,2008. then this Letter Agreement will not expire until midnight on June 30,201 1.

In addition, EPA and the CD-8 Work Defendants may mutually agree in writing to a later expiration date at any time prior to the expiration of this Letter Agreemenr.

B. LfSections I through VI and Section IX of this Letter Agreenrent expire pursuant to the preceding Paragraph VIII.A, then: (1) EPA and the CD-6 Work Defendants each will be deemed to have reserved all of tl~eir respective rights under CD-8 i n relation to the subject matter of this Letter Agreement, if any, and any such rights will be considered presenred; 2) any statutes of limitation or limitations in equity, including but not limited to laches, applicable to such reserved rights will be deemed to have been tolled for the time period benveen the effective date of this Letter Ageement and the date of its expiration; and (3) any waivers and releases provided to EPA pursuant to Paragraph IV will be null and void as of the date of such expiration.

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1X. Notices

Any notices ~.ctluired under this Lerrer Agrzemc~it shall be psovided :IS follows:

EPA and rhe CD-8 Work Defendants may change [heir respective designated notice recipients or the rccipienrs' contacr information at any time by written notice.

As to EPA:

Pankaj Arora EPA Project Coo~.dinator - 011 Sitc Superfund Site Clcanup Section 4 (SFD-7- 4) U.S. Environmerllal Protection Agency. Region IX 75 Ha\vthome Sl. San Francisco. CA 94 105

Eric A. Esler Assistant Regional Counsel - 011 site Office of Regional Counsel (ORC-3) U.S. Environmental Protection Agency, Region 1X 75 Hawthorne Sr. San Francisco. CA 94 105

X. Effective Dare: Counrem:i~zs

As to [he CD-8 Work Defendants:

Mary Esper, President New Curc. Inc. 2550 Greenwood Aven~lc Monter-cy Park. CA 9 1755

David Hirsch. Chairman. 011 Sreering Committee C/O New Cure. Inc. 2550 Greenwood Avenue Monterey Park. CA 9 1755

David A. Giannotti, Esq. Offices of David A. Giannorti Watt Plaza 1925 Century Park Eas~. Suite 950 Los Angelss, CA 90067

This Letter Agreement shall be effective as of the dale of the last signature and may be cxecuted by the parties in multiplc counterparts, each OF \vhich shall be deemed an original and all of which shall cons~ilute the same documenr.

Sincerely.

K e i ~ h A. Takala Direcror, U.S. EPA Region IX Supel-fund Division

Revielved and Acccptcd oo Uelialf of the CD-8 Work Defe~ida~lts:

Counsel for the CD-8 Work Defendants

cc: CD-8 Work Defendant Group Members Mary Esper, President, New Cure, Inc. David Hirscli, Chairman-OII Steering Committee and Trustee-011 Sile Custodial Trust

EXHIBIT 9

UNITED STATES ENVIRONMENTAL PRoTEcTloN AGENCY RECEIVED REGION IX

75 Hawthorne Street San Francisco, CA 94105 OCT I ij 2007

NEW CURE, INC.

CERTIFlED MAIL NO. 7006 0810 0003 9305 8819 RETURN RECEIPT REQUESTED

Mary Esper, President New Cure Inc. 2550 Greenwood Ave. Monterey Park, California 91755

CERTlFIED MAIL NO. 7000 1670 0009 3 120 6242 RETURN RECEIPT REQUESTED

David A. Gianotti, Esq. David A. Gianotti, A professional Corporation 1925 Century Park East, Suite 950 Los Angeles, California 90067

Re: REQUEST FOR PAYMENT OF EPA COSTS Operating Industries, Inc. Superfund Site 58, (2T, 25) Monterey Park, California

Dear Ms. Esper and Mr. Gianotti:

This letter serves to request payment from the 'Work Defendants" to the Third Partial Consent Decree, No. CV 91-6520 JGD (WRX) ("CD-3"; Caption page attached) for $507,419.46 in oversight costs incurred by the United States Environmental Protection Agency ("EPA") at the Operating Industries, Inc. LandfiU Site ("Site") in Monterey Park, California. This request is made pursuant to CD-3, Paragraphs V.S, XW.C and XVII.E. Paragraph V.S. defines the term 'Tuture Oversight Costs" to include all costs incurred by "EPA .... in oversight of the Work and Excluded Work." Paragraph XVTI.C. "Reimbursement of Response Costs;" "United States Future Oversight Costs," obligates the "Work Defendants" to reimburse EPA for the first $16 million of oversight costs, and all such costs over $21 million, related to the CD-3 "Work" and the item of "Excluded Work referred to as the "Cover Protection Component of the Cover System for the North Slope of the South Parcel."

Finally, Paragraph XW.E, "Future Costs of Work or Excluded Work," requires the Work Defendants to pay all costs over $6 million incurred for each such item [of Excluded Work]." According to EPA's records the Work Defendants to date have paid $9,088,377.62 in oversight costs, and therefore are required to pay EPA for its documented oversight costs. In addition, based on a letter from Ian Webster, dated January 12,2006, EPA believes the $6 million cost threshold was reached in relation to the "Thermal Destruction Facility" item of Excluded Work in November 2005, and the Work Defendants therefore are now obligated to pay EPA's oversight costs in relation to this item of Excluded Work.

Two cost summaries are enclosed with this letter to document the $507,419.46 in costs incurred by EPA as required by CD-3, Paiagraph XVLI.C., as well as the narrative descriptions of the work performed by the U.S Army Corps of Engineers for the period of time covered by this billing. The Cost summary for account number " 1x5 8" covers the time period from July 1, 2005 through June 30,2007 and reports EPA's costs for oversight of the CD-3 Work (which includes the "Cover Protection Component of the Cover System for the North Slope of the South Parcel" item of excluded work.) (The summary for 1x58 includes the period which was billed last year, so the Work Defendant's payment of $56,374.44 received on October 11,2006 has been deducted from the total amount now due.) The cost summary for account number "3x58" covers the time period from December 1,2005 through June 30,2007 and reports EPA's costs for oversight of the Thermal Destruction Facility. EPA reserves the right to request payment in the future for any additional costs for the time periods covered by the enclosed cost summaries which are not included in the current billing.

As provided in CD-3, Paragraph XVILC, the Wodc Defendants must make the requested payment within thirty (30) calendar days of the date of receipt of the enclosed cost summaries. You may choose to make the payment of $507,419.46 either by means of an electronic funds transfer or by remitting a check in this amount. If you choose to pay by means of an electronic funds transfer the payment must be transmitted in accordance with the enclosed instructions. If you choose to pay by check, the check must be made payable to the "U.S. EPA Hazardous Substance Superfund" The check and the required accompanying transmittal letter must clearly reference the identity of the Site ("Operating Industries, SSlD #2T'). Please note that there is a new address for payments, payments should now be sent to::

U S. Environmental Protection Agency Region 9 Superfund payments Cincinnati Finance Center P 0. Box 979076 St. Louis, MO 63197-9000

Please also send a copy of the check and the transmittal letter, and direct any questions you may have concerning this billing, to Greg Pennington at:

U.S. Environmental Protection Agency, Region IX 75 Hawthorne Street (SFD-7-5) San Francisco, CA 94105 (4 15) 972-3 120

If you have any legal questions regarding this matter please contact Eric A. Esler at:

U. S. Environmental Protection Agency, Region IX Office of Regional Counsel, ORC-3 75 Hawthorne Street San Francisco, CA 94105 (4 15) 972-3947

In accordance with Section 107(a) of CERCLA, if payment is not received within thirty (30) days of receipt of this notice, interest on past costs incurred shall accrue from the date of receipt of this request for payment while interest on future costs shall accrue from the date of expenditure. Interest rates are variable. The rate applicable on any unpaid amounts for any fiscal year is the same as is specified for interest on investments of the Hazardous Substance Superfund which is determined by the Department of the Treasury. The current rate of interest is 5.02% per annum.

Thank you for your past cooperation with EPA and your attention to this matter.

Sincerely,

Frederick K. Schauffler v Chief, Site Cleanup Section 4 Site Cleanup Branch Superfund Division

Enclosures

EXHIBIT 10

UNITED STA

SEP 9 0 2008

M q Esper, President New Om Inc. 2550 Greenwood Ave. Montaey Park, California 9 17:

David A. Giannotti, Esq. DAVID A. GIANNOTT, P.C. 125 North Mnplc Drive Suite 205 Beverly Blls, California 90210

Re: REQUEST FOR Operating Indust Monterey Park, (

Dear Ms. &per and Mr. Gianot

This letter serves to reqr Consent Decree, No. CV 91-65 in Oversight costs incurred by t Operating Industries, Znc. Land! made pursuant to CD-3, Paragr;

Paragraph V.S. defines I

"EPA...in oversight of the Wor part, that "if Work Defendants 1 this Dtcrce to Work shall be re; you know, the Work Defendant Finally, Paragraph XV1I.C. f ob ccsts incurred by the United Str the first $16 million of the Unit $21 million. According to EPA in Oversight costs, and therefon

S ENVIRONMENTAL PROTECTION AGENCY REGION IX

76 Hawthor~~~ Stmet San Francisco, CA 94105

CERTIFIED MAIL NO. 7007 0710 0003 6239 5761 RFIVRN REcEwT REQUESTED

AYMENT OF EPA COSTS 3, Inc. Superfund Site 58, (2T, 2S) lifomia

it payment fium the "Work Defendantsu to the Third Partial JGD CWRX) ("CD-3"; Caption page attached) for $474,691.12 United States Enviromtnd Protection Agency P A " ) at the Site ("Site")in Montcrey Park, California This request is

is V.S , VULD, and XW.C. 1.

: term "Future Oversight Costsu to include all costs incurred by md Excluded Work." Paragraph W . D provides, in relevant form an itern@) or portion of Excluded Work, all references in to apply to that item(s) or portion of Excluded Work. . . ." As lave and arc performing all items of !he CD-3 Excluded Work. ates the Work Defendants to reimburse EPA "for the Oversight s under this Dccrct for Work" This last obligation extends to States' Oversight costs for CD-3 Work, and all such costs over records the Work Defendants to date have paid $9,394,565.09 re required to pay EPA for its documented Oversight costs.

Two cost summaries are enclosed with this letter to document the $265,802.39 in costs incurred by EPA as required by CD-3, Paragraph XVII.C. Additionally, the narrative descriptions of the work performed by the U.S Army Corps of Engineers for the period of time covered by this billing and the financial back-up documentation are also enclosed.

The Cost summary for account number "lX58" covers the time period from July 1,2007 through June 30,2008 and reports EPA1s costs for Oversight of the CD-3 Work (which includes the "Cover Protection Component of the Cover System for the North Slope of the South Parcel" item of excluded work). The cost summary for account number "3x58" also covers the time period from July 1,2007 through June 30,2008 and reports EPA1s costs for Oversight of the Thermal Destruction Facility. EPA reserves the right to request payment in the future for any additional costs which are not included in the current billing, including all CD-3 Work and Excluded Work Oversight costs ,

Additionally the requested total of $474,691.12 includes $201,231.99 not yet paid from lsist year's billing letter and $7,656.74 in accrued interest on the unpaid amount through September 30, 2008. The total of last year's billing was $507,419.46 and two payments have been received to date: 1) $122,991.05 paid on 11/15/07; and 2) $183,196.42 paid on 9/16/08.

As provided in CD-3, Paragraph XVILC, the Work Defendants must make the requested payment within thirty (30) calendar days of the date of receipt of the enclosed cost summaries. You may choose to make the payment of $474,691.12 either by means of an electronic funds transfer or by remitting a check in this amount. If you choose to pay by means of an electronic funds transfer the payment must be transmitted in accordance with the enclosed instructions. If you choose to pay by check, the check must be made payable to the "U.S. EPA Hazardous Substance Superfund." The check and the required accompanying transmittal letter must clearly reference the identity of the Site ("Operating Industries, SSID #2Tn). Please not5 that there is a new address for payments, payments should now be sent to:

U S. Environmental Protection Agency Region 9 Superfund payments Cincinnati Finance Center P 0. Box 979076 St. Louis, N O 63197-9000

Please also send a copy of the check and the transmittal letter, and direct any questions you may have concerning this billing, to Greg Pennington at:

U.S. Environmental Protection Agency, Region IX 75 Hawthorne Street (SFD-7-5) San Francisco, CA 94105 (4 15) 972-3 120

If you have any legal questions regarding this matter please contact Thomas Butler at:

U. S. Environmental Protection Agency, Region IX Office of Regional Counsel, ORC-3 75 Hawthorne Street San Francisco, CA 94105 (415) 972-3869

In accordance with Section 107(a) of CERCLA, if payment is not received within thirty (30) days of receipt of this notice, interest on past costs incurred shall accrue from the date of receipt of this request for payment while interest on future costs shall accrue from the date of expenditure. Interest rates are variable. The rate appIicable on any unpaid amounts for any fiscal year is the same as is specified for interest on investments of the Hazardous Substance Superfund which is determined by the Department of the Treasury. The current rate of inreres t is 2.15% per annum.

Thank you for your past cooperation with EPA and your attention to this matter.

Sincerely,

Frederick K. Schauffler / Chief, Site Cleanup Section 1 California Site Cleanup Branch Superfund Division

Enclosures

DAVID GIANNOTTI - semspub.epa.govFebruar! 19.2009 Page .; Attached as Exhibit 6 to the Giannoni...

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