Status Report
CBS to Special Magistrate Foster detailing CBS' objection to the EPA plan for the Water Treatment Plant at ICC Springs
July 8, 1999

Dear Honorable Kennard P. Foster:

Today, CBS Corporation ("CBS") is filing a Status Report concerning thefederal government's plan to construct a water treatment system at Illinois Central Spring. Foryour convenience, we are sending the enclosed copy of the Status Report directly to yourchambers. Although the original filed with the Clerk of the Court is unbound to comply with theLocal Rules, the courtesy copy sent to you is velobound for ease of reference.

As is explained in detail in the Status Report, CBS believes that the treatmentsystem which the federal government is now planning to build at Illinois Central Spring is verydifferent from the one that it originally told the Court in August 1998 that it was planning toconstruct. The U.S. Environmental Protection Agency ("EPA") no longer plans to have the system operational in the late summer or early fall of this year, but rather the system would not bein operation until the spring of the year 2000, almost two years after EPA made its original decision to build a system. EPA's own estimate of the costs of the proposed system has mushroomed from $1.3 million in capital costs in EPA's original Action Memorandum to $5.2million. In essence, EPA's design no longer calls for an interim system, as originally contemplated, but for the major components of a final system, including a building with a 20 yearuseful life, a paved road and parking lot, two huge 30-by-60 foot retention tanks, and a pumpingcapacity that is three times greater than the highest measured flow through Illinois Central Spring during the last three years. Moreover, because this system will be largely immovable, it could not be adapted to a different location if the results of the studies now underwaydemonstrate that a treatment system would be more effective if placed elsewhere.

CBS believes that by designing and building this truly final system now the federal government is acting inconsistently with its prior representations to the Court, and is effectively precluding meaningful settlement negotiations about final water treatment, which the Court ordered to occur, at the federal government's urging, after the excavation work at Lemon Lane Landfill is completed. By that time, EPA will have already built its final system.

CBS is bringing this matter to the attention of the Special Master now in order to make a record of the events surrounding the federal government's decision to build this system, including CBS's own efforts to advise EPA of the short-comings of its approach. CBS believes that it is necessary to make this record because of the federal government's frequently reiterated threat of suing CBS to recover the costs it spent designing and building this system.CBS continues to believe that it is protected from such a cost recovery action by the Covenant Not to Sue, paragraph 111 of the Consent Decree in this action which remains in effect.

Respectfully submitted,

David B. Hird
CBS CORPORATION'S STATUS REPORT CONCERNING
THE FEDERAL GOVERNMENT'S PLANS TO CONSTRUCT A
FINAL WATER TREATMENT SYSTEM AT LEMON LANE LANDFILL
TO BE OPERATIONAL IN THE YEAR 2000, RATHER THAN BUILD AN INTERIM SYSTEM IN 1999, AS IT PREVIOUSLY TOLD THE COURT

CBS Corporation ("CBS") submits this Status Report in an effort to bring to theSpecial Master's attention the federal government's radical change of direction in its approach to water treatment at Lemon Lane Landfill. Essentially, the U.S. Environmental Protection Agency ("EPA") is no longer proceeding to construct an interim treatment system at IllinoisCentral Spring with an anticipated date of operation in the late summer or early fall of 1999, as it previously told the Special Master. Instead, EPA is planning to build a final water treatment system that the federal government itself does not expect to be operational until spring 2000 at a cost estimated by EPA of $5. 4 million.EPA's new cost projection is more than four times EPA 's original estimate of $1. 3 million for the capital cost of the interim system, and more than two and a half times its original estimate of $2.1 million for the project as a whole. Moreover, CBS believes that EPA has underestimated the cost of the project and the final cost is likely to be much greater.

EPA's decision to build a final system is inconsistent with its prior representations to the Court and to the parties. By going ahead with its plan, EPA will have made the critical decisions about a final system - e.g., location of facility, pumping capacity, retention capacity, etc. - before complete technical information is available to make these decisions properly. This approach will preclude the parties from conducting meaningful settlement negotiations about final water treatment issues after the excavation work at the landfill is completed in 2000, as they were instructed to do under the Special Master's Report and Recommendations of January 20, 1999, and Judge Dillin's Order of February 1, 1999, because by the time these negotiations are scheduled to begin, EPA will have already built its final system.

CBS is bringing the matter to the attention of the Special Master now because of the federal government's announced intention to seek recovery of the costs spent on building this system from CBS and its intention to try to make CBS take over the operation of the system.CBS continues to believe that the federal government is barred from pursuing such a cost recovery action against CBS by the Covenant Not to Sue in the Consent Decree. In addition, EPA's decision-making process about final water treatment is inconsistent with the Comprehensive Environmental Response Compensation andLiability Act ("CERCLA"), and the National Contingency Plan ("NCP").

Finally, and most important, EPA's decision is not technically supportable, it is not only arbitrary and capricious as a matter of law, but is simply bad decision-making as a matter of common sense. Although EPA had originally agreed with CBS to follow the approach of "phasing" water treatment activities - taking limited interim steps initially and only undertaking more extensive activities later after the excavation work is done, water treatability and hydraulic conduit studies are finished, and more technical information is available - EPA is making technical decisions that involve the expenditure of millions of taxpayer dollars on the basis of incomplete information and unsupportable assumptions. Even now, it is apparent that EPA's final system includes many costly features that may be unnecessary and expensive to operate. Moreover, as the parties learn additional information, many other features of the system will likely prove unnecessary. Indeed, EPA may have placed the system in the wrong location to operate most effectively. All of these problems could be avoided if EPA did what it said it was going to do originally: not spend too much money on an interim system, use a modestand flexible design for the interim system to allow for maximum reuse of the equipment, and wait until further data is collected to design a final system.

As described below, CBS has made these points to EPA in correspondence and face-to-face meetings, but EPA has chosen to continue on this arbitrary course of action. Accordingly, CBS is notifying the Special Master about EPA's decision to prematurely build a final treatment system in order to make a record to support CBS's defenses to the cost recovery action threatened by the federal government.

1. UPDATE ON CBS REMEDIAL ACTIVITIES

Before turning to the principal subject of this Status Report - EPA's decision to build afinal treatment system prematurely at Illinois Central Spring - CBS would like to provide the Special Master with a brief update on remedial activities it has undertaken at the various Bloomington sites.

Winston Thomas - All site work is completed except for the remediation of the tertiary lagoon. After the winter shutdown, CBS remobilized in March and spent three weeks treating water that had accumulated in the lagoon. Then, CBS resumed the dredging and filter pressing ofthe sludge. This operation is complete, and the final excavation of residual sludge at the bottom of the lagoon is almost complete. Post excavation sampling has not detected polychlorinated biphenyls ("PCBs7') in most areas tested, in the limited instances where PCBs were detected, the concentration levels are very low. With the agreement of the other parties, CBS plans to rescrape those grids which show residual PCB contamination until the level of PCBs in those grids is less than I part per million ("ppm"). Accordingly, no further cover will be placed over the lagoon. Scraped material with a PCB concentration between 1 and 25 ppm will be placed in the south berm and covered by twelve inches of clean soil. No deed restriction will be required for the 1 7-acre site, except for the 1 acre south berm area. Site work should be completed in August 1999.

Neal's Landfill - CBS mobilized to begin site work on April 19, 1999 and is proceeding efficiently through the work plan requirements. At the end of June, the first phase of the excavation and consolidation work was about 50% complete, on schedule to be completed in August. CBS is completing the design for the final RCRA cap, which will be submitted for review by the governmental parties in July

Neal's Dump - Final site restoration is complete. CBS has submitted a long term ground water monitoring plan to the governmental parties for their review. EPA has begun its process to remove this site from the National Priorities List.

Bennett's Quarry - The parties are completing negotiations on a Statement ofWork ("SOW'). Even before final agreement on a SOW, CBS has prepared a work plan that is under review by the governmental parties. Preparations are being made to begin site cleanup in August 1999, to be completed by the end of the year.

Lemon Lane Landfill - CBS is continuing its hydraulic conduit investigation, using a combination of geophysical investigation methodologies. A progress report was issued to the governmental parties on May 21, 1999. Additional test borings have been made, and the results of those borings are being evaluated.

II  BACKGROUND RELATING TO WATER TREATMENT ISSUES

1.   The Parties' Initial Discussions about Water Treatment

The parties originally began to discuss ground water treatment in connection with Lemon Lane Landfill in the spring of 1998. At that time, the parties disagreed about the performance standards that should be used in designing a treatment system and assessing its success. The governmental parties took the initial position that a water treatment system should capture all the ground water coming from the landfill and treat the polychlorinated biphenyls ("PCBs") in that water to a discharge level of 0.00079 parts per billion ("ppb"), which was the ambient water quality standard adopted by the State of Indiana. The governmental parties believed that the system should operate indefinitely, and that the performance of the system should be measured by the level of PCBs in the fish15 miles downstream in Clear Creek.

CBS disagreed. CBS pointed out that based on several years of data collection at Illinois Central Spring, it had learned that the flow of ground water emerging at Illinois Central Spring was generally low, usually less than 300 gallons per minute ("gpm") or less, except in severe wet weather events that do not occur on a frequent basis. Accordingly, CBS contended that a system could be highly effective in capturing most of the mass of PCBs, even if it did notcapture the full extent of the higher groundwater flows during storm weather. CBS also contended that the State's ambient water quality criterion of 0.00079 ppb for PCBs was impracticable, over-stringent, and not justified by public health considerations. As originally determined by the State, this standard was supposed to apply to the ambient average concentration of PCBs in a stream as a whole, but, in an act of over-cautiousness, the State also claimed that this standard should apply to discharges at the end of the pipe, before the discharged water mixed with other water in the stream. The over-stringency of this standard isa pparent when it is compared with the federal standards for PCBs. In particular, in 1998, EPA adopted a comprehensive regulation for PCBs, often referred to as the PCB "Mega-rule," in which the Agency established a default water discharge standard for PCBs of 3 ppb. 40 C.F.R. 761.79(b)(1)(ii). This State water discharge standard is about 10,000 times as stringent as this federal discharge standard. Moreover, the State discharge standard is about 1000 times more stringent than EPA's drinking water standard for PCBs, which is 0.5 ppb. 40 C.F.R. 761.79(b)(1)(iii). Indeed, the level set by the State is so low, it cannot be detected, using EPA approved methods. Finally, CBS argued that the level of PCBs in the fish 15 miles downstream was an inappropriate to measure the performance of a treatment system, since there may be other sources of PCB-feeding into the stream.

Although the parties disagreed about the goals of a water treatment system, EPA and CBS did agree that a final water treatment system for Lemon Lane Landfill could best be designed after completion of CBS's hydraulic conduit study concerning the movement of groundwater around the landfill, the implementation of the excavation remedy at the Landfill, the implementation of surface water controls, and the collection of other data relevant to water treatment, such as the results of treatability studies. These parties agreed that the information gathered during these activities would help design and locate the most effective water treatment system.. Indeed, this understanding was confirmed by government correspondence to the Special Master, see Steven D. Ellis' letter to the Special Master of January 13, 1999, and in the Special Master's Status Report of January 20, 1999.

The governmental parties nonetheless demanded that an interim system be constructed until a decision could be reached on final water treatment. They expressed concerns about the supposed continued exposure to fishermen who might eat PCB contaminated fish, pointing to the Level Five ("do not eat") Fish Advisories for PCBs that the State of Indiana placed on Clear Creek; they contended that an interim systemshould be installed expeditiously to address this alleged emergency. CBS did not see theurgency for installing an interim system. The State had put a "do not eat" fish advisory for PCBsin most, if not all, game fish species in Clear Creek as far back as 1978, and every stream inIndiana had a Level Five Fish Advisory for PCBs in at least one species.

Further, the information available did not show there was a significant risk of exposureto the public to PCBs in the fish in Clear Creek. The portion of Clear Creek closest to IllinoisCentral Spring is rarely, if ever, used for fishing. Moreover, the fish throughout Clear Creek aregenerally too small to be used as food. Most fishermen in the area would tend to fish in nearbyLake Monroe, where the fish are both larger and more plentiful.

Nonetheless, in an effort to resolve the matter, CBS offered to install a simple gravity-based system, which CBS calculated could capture about 50 percent of the mass of PCBs.CBS's proposed system could be installed quickly, in a matter of weeks at low cost. If therereally is an emergency, such a system is a practical approach to taking interim action, whileleaving the parties maximum flexibility in devising a final treatment system. Instead of CBS'sproposal, EPA preferred the construction of a more elaborate and expensive interim systemthat would capture about 80 percent of the PCB mass. It would take about a year for EPA toinstall this system, and the capital cost of the project would be between $1 and $2 milliondollars.

In July 1998, as the parties continued their discussions, EPA announced that it wouldconduct a treatability study of low and high flow waters at Illinois Central Spring. EPAindicated that the results of the treatability study might be useful in determining a feasibledischarge standard and in identifying which treatment processes would be most effective. EPA's treatability study was supposed to take eight weeks. But before that time was up, EPA and the other governmental parties raised the disagreement abou interim treatment before the Special Master at a hearing on August 14, 1998. The Special Master ordered the parties to negotiate, but EPA and the Department of Justice told CBS that they had no authority to negotiate. The Special Master ordered the representatives of the federal government to get negotiation authority and to resume discussions with CBS on August 18, 1998. But those negotiations never occurred because EPA announced on that date that it would build its own interim system.

2.   EPA's Original Decision to Build an Interim System

On August 21, 1998, the federal government submitted a Status Report (copy attached as Exhibit 2) to the Special Master, stating that EPA would go ahead and construct its proposed interim system at its own expense, but that the federal government intended to bring a cost recovery action against CBS. In its Status Report, the federal overnment specifically referred to the State of Indiana Level Fish Advisories at Clear Creek as the justification for its actions.

CBS notified the Court of its concerns about EPA's proposed interim system in a Status Report filed on September 10, 1998. (Copy attached as Exhibit 3) Specifically, CBS noted that if EPA truly believed in the urgency of providing interim treatment, CBS's proposal made more sense because it could be installed in a matter of weeks while EPA's approach would take about a year to install. CBS further expressed the concern that adequate data did not yet exist to properly design a treatment system, and that EPA's proposal to build an interim system on such a large scale was likely to result in the construction of expensive components that could not be used in a final system. CBS pointed out that its study of the hydraulic conduits around Lemon Lane Landfill was underway and that the technical information being collected in that study would be important in determining the optimal location for a water treatment system and designing the system itself.

Also, in that Status Report, CBS challenged EPA's conclusions, based solely on the Fish Advisories, that current conditions at Clear Creek created a serious risk to human health, pointing to the findings of EPA's sister agency, the Agency for Toxic Substances and Disease Registry ("ATSDR"). After studying the risk presented by PCBs in Illinois Central spring and Clear Creek, ATSDR concluded that "neither children nor adults are likely to engage in activities in the springs and streams that would lead to significant exposures to site-related contaminants," and that these streams were too small to support fishing and that most of the species in the streams were too small for human consumption. Finally, CBS noted for the Court that it was protected from EPA's cost recovery claims by the Covenant Not to Sue in the Consent Decree, but was willing to negotiate with the other parties about appropriate water treatment.3.

3. EPA's Action Memorandum and CBS's Comments

On September 30, 1998, EPA issued a formal Action Memorandum, purporting to authorize the design and construction of its interim system as a CERCLA removal action (copy attached as Exhibit 4). In the Action Memorandum, EPA established two design criteria for the system: (1) the system should operate at 1000 8pm capacity to capture an estimated 80% of the PCB mass, and (2) there should be a retention basin (not a tank, but a basin) to hold two acre-feet of water. Curiously, despite the dispute between the parties about PCB discharge criteria, the Action Memorandum did not reference a PCB discharge level for the treated water. EPA authorized a total budget of $2,109,303, of which $1,303,172 represented the capital cost of construction, $197,000 represented one year's operation and maintenance, and the remainder represented EPA internal costs and oversight costs. EPA projected that the system would be operational by the summer or fall of 1999. EPA again attempted to justify its decision on the basis of the supposed risk to fishermen in Clear Creek and the Indiana Fish Advisories.

CBS submitted its comments on EPA's Action Memorandum in a letter dated November 10, 1998 (copy attached as Exhibit 5). This letter raised several objections to EPA's interim system, its decision-making process, and its threat to bring a cost recovery action against CBS. Specifically, the letter made the following points:

• The federal government was barred from bringing an action to recover the cost sof building its treatment system against CBS by the terms of the Consent Decree (pp. 2-5).
• EPA failed to solicit public comment about its interim system, including comments from CBS, in violation of the Due Process Clause and the NCP(PP 5-7).
• EPA improperly relied on post-hoc rationalizations to support a previously made decision (pp. 7-8).
• 
  
  EPA failed to include relevant documents and information in the administrative record - a critical omission was the ATSDR report that found that the spring and the stream created no significant health risk (pp. 8-9)
• EPA overestimated the mass of PCBs emerging from the spring (pp. 910).
• EPA had no data to support its conclusions that PCBs from Illinois Central Springs posed a threat to humans through inhalation, ingestion of water, or direct contact (pp. 10-1 1)
• EPA's analysis overestimates the seriousness of the data regarding PCBs in fish tissue (pp. 11-12).
• EPA's conclusion that people eat fish caught in the part of Clear Creek affected by PCBs was not supported by reliable data, and EPA overestimated the cancer risk to people supposedly eating these fish (pp 12-15).
• EPA's conceptual design for an interim treatment system was arbitrary and capricious (pp. 15- 16).
• EPA's decision violated CERCLA's statutory limits on EPA removal actions because it authorized an expenditure of over $2 million on a project to last more than one year (pp. 16-17).
  
  

A key point in the letter was to rebut EPA's contention that emergency response action was justified by recent PCB data in Clear Creek, and the Level 5 Fish Advisories. CBS pointed out that information about PCBs in Clear Creek had existed prior to the entry of the Consent Decree in 1985, and that 1997 data (the data relied on by EPA in its risk analysis) actually showed a decline in PCB levels from the 1996 data. More significantly, both EPA's and the State of Indiana's data for 1997 (the most recent data available) demonstrated that PCB levels in all but one species of fish were lower than the trigger level for a Level Five Fish Advisory. 2 Thus, if this data had been used by the State of Indiana in setting the Fish Advisories, the State would have set lower level Fish Advisories for an but perhaps one species. CBS also reported that it had learned from a conversation with the State official responsible for setting Fish Advisories, that the 1997 EPA data had not been submitted to the State, and the 1997 State data was not reviewed in setting the Advisories for the year 1998. See Exhibit 5, at pp. 11- 12.


With respect to EPA's conceptual design for an interim system, the letter pointed out that the system would not be installed for at least a year at a capital cost of $1.3 million, while CBS's proposal could be installed in a matter of weeks at a cost of $75,000, and would be expected to capture the same PCB mass over a three-year period of operation. See Exhibit 5, at pp. 15-16.

EPA never responded to this letter.

4. EPA's Failure to Consult with CBS on Design Issues

Following the issuance of the Action Memorandum, EPA transferred authority over the project of designing and building the treatment system away from Thomas Alcamo, who has been EPA's project manager for all other matters relating to the cleanup of the Bloomington sites and who has been involved in the court proceedings relating to the Consent Decree since late 1997. Instead, authority over this project had been given to KenTheisen who had not been involved in any of the prior discussions among the parties or the proceedings before the Court. Mr. Theisen retained a new contractor, Earth Tech.

Although CBS had disagreed with EPA about its selection of an interim system, CBS had consistently offered to consult with EPA about design and other technical issues, and to share the knowledge it had gathered studying the ground water system at Lemon Lane Landfill over the years. Initially, Earth Tech's Britt Luther contacted CBS's Mike McCann to arrange in the November-December 1998 time frame for a joint tour of the site and of CBS's Neal's Landfill spring water treatment plant, as well as a technical meeting with CBS to discuss CBS's knowledge of the flow at Illinois Central Spring and its experience operating the Neal's Land fill treatment system. CBS was amenable to both the tour and the meeting, but neither the tour nor the meeting ever happened. Instead, Luther called McCann again to cancel the tour and the meeting, telling McCann that EarthTech had been instructed that it was to operate under a "gag order" not to communicate with CBS.

EPA finally did arrange for a technical meeting with CBS on January 27, 1999, at which CBS was given sketchy information about EPA's design plans, and was again told by the Earth Tech representatives that they had been operating under instructions not to speak to CBS about design and other technical issues concerning the interim system. At the meeting, Mr.Theisen told CBS that EPA had made its design decisions and that, in order for the Agency to meet its proposed schedule to construct the system by the fall of 1999, EPA could not seriously consider any comments from CBS that would result in anything other than minor changes to that design. CBS was told that the meeting had been scheduled for the purpose of EPA providing other Consent Decree parties with an update on its activities, not to solicit CBS's comments on EPA's design.

Essentially, at this point, EPA's design was set, even though it was not fully described to CBS, and CBS had no meaningful opportunity to submit comments.

5.EPA's Recent Decision to Build a Final System Prematurelv

There were no further technical communications between EPA and CBS until a meeting on March 25, 1999. It was only at that meeting that CBS learned that EPA had extended its proposed construction schedule for the system by almost another year, and that EPA's new estimate for the cost of building the system was more than four times its original budget for capital costs and more than two and half times its original budget for the project as a whole. EPA had made the following radical changes from the original conceptual design set forth in the Action Memorandum:

• EPA was planning to house the system in a structure designed to last 20 years with full heating, air conditioning, plumbing, and electrical capacity as a permanent structure. The building would include a large amount of empty space which could be used to house additional structures. A permanent paved road system and parking lot would also be constructed.
• EPA had designed a pumping capacity, based on a model of a 25-year storm event.The total installed pumping capacity would be 9,500 gpm, even though three years of continuous flow records for the spring showed that it had not flowed more than 3,000 gpm.
• EPA planned to build two large enclosed retention tanks, each of which could contain two acre feet of water. EPA's September 30, 1999 Action Memorandum had called for the construction of one "2 acre feet collection basin." EPA planned to double the amount of retention and to use expensive tanks, rather than more practical basins or ponds.
• EPA planned to install three different types of filters in the system.
• EPA no longer planned to have the system operational by the summer or fall of 1999, but instead hoped to have the system operational by the spring of 2000. Thus, a one year construction project had become almost a two year project.
• EPA no longer expected the capital cost of construction to be $1.3 million, asspecified in the Action Memorandum. Instead, EPA projected the cost to be about $5.4 million, a four-fold increase
• EPA was determined to build this system for at least $5.4 million, before the data would be available from CBS's hydraulic conduit study and from EPA's own treatability study. EPA also intended to have the system built before it knew how the excavation work and surface water control measures might affect the flow of PCB-contaminated ground water around the site.

EPA still had not identified what discharge criteria would apply to this system.

At the meeting, EPA's lawyers made a request for comments from CBS. But EPA's Project Manager, Mr. Theisen, again stated that because of EPA's perceived need to meet its new construction schedule, the Agency would not be able to seriously consider any comments from CBS that would involve anything other than minor changes to the design.

Following this meeting, on April 12, 1999, EPA wrote to CBS stating that it completed design work for the system and demanding that CBS take over the construction of EPA's new design on EPA's time schedule. Letter of Jeffrey A. Cahn to David R. Berz ofApril 12, 1999 (copy attached as Exhibit 6). 6. CBS's Efforts to Reopen Negotiations

CBS wrote back to the Agency on April 22, 1999, indicating that CBS was preparing detailed comments on EPA's design that would be presented shortly and suggested that it would be in the best interests of both parties if EPA made no further commitments to build its new system until EPA had had an opportunity to review CBS's comments. Letter of David R.Berz to Jeffrey A. Cahn of April 22, l 999 (copy attached as Exhibit 7). EPA replied on May3, 1999, stating that it would not delay its efforts to build the new system, waiting for CBS's comments . EPA further asserted - incorrectly - that information had been regularly shared withCBS throughout the process and that CBS had already had substantial opportunities to make comments. Finally, EPA demanded that CBS undertake the construction of the system "as long as it was built in accordance with EPA's September 30, 1999 Action Memorandum." Letter from Jeffrey A Cahn to David R. Berz of May 3, 1999 (copy attached as Exhibit 8). EPA made this demand even though its own Action Memorandum had called for a $1.3 million system to be built by the fall of 1999 and its new design called for a system that would cost about $ 5.4 million to be built by the spring of 2000.

CBS submitted its technical comments on EPA's new system on May 12, 1999, along with a detailed cover letter, figures and tables (copy attached as Exhibit 9). CBS pointed out that what EPA was really designing was a final, not an interim, system, and that the Agency was making important decisions without the complete information that would be available once the excavation work was complete and the hydraulic conduit study was finished. Chief among the decisions made by EPA prematurely was to choose a location for the final treatment plant, determine the size and type of retention system to be used, the amount of pumping capacity,and what types of additional equipment would be needed. The technical comments went into great detail about all of the engineering aspects of EPA's new design.

Following submission of its technical comments, CBS requested a further meeting with EPA about the system. The purpose of the meeting, from CBS's perspective, was to explain how an interim system could be built to meet the design criteria in its original Action Memorandum for an amount approximating EPA's original $1.3 million cost estimate. While CBS believed that the interim system called for in EPA's Action Memorandum was itself unnecessary, it certainly was more practical than EPA's new design.

This meeting occurred on June 1, 1999 At the outset of the meeting, EPA demanded that as a condition for it to seriously consider any other design for a treatment system, CBS first had to agree to reimburse EPA $1 million for the design and site preparation costs that EPA had already spent. During the meeting, CBS attempted to explain how a much less costly treatment system could be built to meet the two essential criteria for an interim system set forth in EPA'sSeptember 30, 1999 Action Memorandum: (1) capacity of 1000 gpm; and (2) two acre feet of storage. See CBS Presentation Materials of June 1, 1999 (copy attached as Exhibit 10). CBS even suggested that if EPA agreed to allow CBS latitude with respect to other design issues, CBS might be willing to construct a system that met those two criteria and have it in operation before excavation began at the landfill. But if CBS were to take on this expense, EPA and CBS had to come to a consensus about the overall goals of water treatment, addressing the issues ofcapture capacity, discharge criteria, and performance standards that the parties had originally discussed in the spring and summer of 1998.

EPA rejected CBS's efforts. After the meeting, CBS attempted to continue a dialogue about water treatment issues. EPA told CBS that the Agency had held an internal meeting during which it resolved to construct the system according to its new design, at a capital cost of at least $5.4 million, to be operational in the spring of 2000. In a letter from Jeffrey A. Cahn to David R.Berz dated June 21, 1999 (but received on June 28, 1999) (copy attached as Exhibit 1 1), EPA confirmed its intention to go forward with its new design, and its demand that CBS pay it all of its outstanding costs and take over the project as designed by EPA's contractor.

III. DISCUSSION OF CONCERNS RAISED BY EPA'S NEW WATER TREATMENT DESIGN AND ITS CONSTRUCTION SCHEDULE

1.EPA's New Design is for a Final Svstem, not an Interim One

Although EPA continues to call the new system it designed an "interim" system,everything about this design demonstrates that it is really intended to be the final water treatment system, and that it is very different from the proposed interim system that EPA described to the Court in August 1998:

Schedule: EPA does not expect to have the system constructed and operational until thespring of 2000, almost two years after it began the design process, and almost one year later then it originally projected.

• Location EPA, in its new design, has predetermined the location of a final treatment systemby calling for the construction of an immovable $5.4 million structure at Illinois CentralSpring, built to last at least 20 years. Although EPA originally indicated that it wasconsidering designing portable facilities (e.g., skid-mounted treatment systems), theAgency's new design abandons that approach. Thus, EPA's new design completelydisregards the possibility that CBS's investigations may support a conclusion that a betterlocation for a final treatment system may be either closer to the landfill itself or furtherdownstream at Quarry Springs.
  
  Capacity: EPA's new design calls for seven pumps with a collective pumping capacity of 9,500 gpm, based on a model of a 25 year storm event. A 25 year event is an inappropriate model to use for an interim system that would be expected to be operational for only two or three years. Moreover, the 9,500 gpm pumping capacity is three times as great as the spring's highest measured flow rate of 3,000 gpm, as determined over three years of continuous flow measurements .
  
  Retention Tanks: EPA's new design calls for two large enclosed retention tanks, each capable of holding two acre feet of water. This is twice the retention capacity selected in EPA's September 30, 1999 Action Memorandum. Moreover, EPA plans to builden closed tanks, rather than use an open pond or basin as originally called for in the Action Memorandum. Each of these tanks will be 60 feet wide by 30 feet tall and will look like anoil refinery. This much retention capacity is not necessary for an "interim" system, and will probably not be needed in a final system. Indeed, retention capacity may be substantially reduced if CBS is able to intercept the groundwater at Lemon Lane Landfill so that only a small amount of water needs to be treated. By constructing tanks, rather than building a lined pond as originally intended, EPA is creating two massive, costly, and immovable structures.
• Size and Useful Life of Structures: The structures called for in EPA's new design are oversized with empty space to house additional unspecified equipment. Moreover, they are being built to last for at least 20 years. Also, a paved road system and parking lot will be built. These structures are characteristic of a final system, not of an "interim" system. Even the Neal's Landfill spring treatment system, which CBS has operated for ten years, has no need for structures as extensive and as permanent. These large, immovable structures are antithetical to the concept of a flexible interim system that can be easily moved and adapted to a subsequent final design.
  
  Filter Press: EPA's Recent Design includes a dedicated filter press for sludge. An"interim" system that is supposed to operate for only a few years is not likely to generate enough sludge to justify a dedicated filter press
• Cost: The cost of EPA's Recent Design makes clear that this is not truly an "interim"system, but a final system. EPA's September 20, 1998 Action Memorandum called for an"interim system" with an estimated capital cost of $1.3 million. EPA's projected capital costfor EPA's Recent Design is four times that amount - at least $5.4 millions Based on its review of Earth Tech's cost estimate, CBS believes that EPA has underestimated the capital cost, and that the actual amount will likely be significantly greater than $5.4 million.In addition, there will be other expenses in completing the project, EPA's design and preliminary site preparation costs by themselves have already reached $1 million. Finally, EPA's design decisions are likely to result in unnecessarily high recurring operating costs.Indeed, EPA's new estimate of annual operating costs is $347,000, which is about a 75% increase over the estimate of $197,000 for annual operating costs in EPA's Action Memorandum.

In sum, what EPA is building are the essential features of what it intends will be a final system. It is an "interim" system only in the sense that EPA plans for minor adjustments after an evaluation period during the first year of operation. Indeed, EPA's design and construction contractor, Earth Tech, confirmed that what it had actually designed was a final system, when it wrote that "the system design and components are biased toward a final remedy" and that its design is based on the concept that "major components of the system would be used in the final design" on pages 1, 2 and 5 of its technical response to comments submitted along with Mr. Cahn' s letter of June 21, 1999 (Exhibit 11).

Moreover, it is clear that EPA's original motivation for building an interim system no longer has any meaning to the Agency. In both the federal government's Status Report of August 21, 1998 (Exhibit 2) and EPA's Action Memorandum of September 30, 1999 (Exhibit 4), EPA took the position that the PCBs flowing through Illinois Central Spring created such a serious risk to human health - through the consumption of fish that nobody eats- that the Agency had to act expeditiously on an emergency basis. Now, EPA is content to let almost two years pass before its system is operational.

2. EPA Made its Final Design Decisions Before Necessary Technical Information Became Available

By moving to a final design prematurely, EPA is making significant design decisions before the relevant technical information becomes available. Back in July 1998, EPA believed that the first step in designing a system was to conduct a treatability study of water at Illinois Central Spring at both (normal) low flow and high (rain storm) flow conditions. EPA projected this study to take eight weeks and to provide data on the effectiveness of different treatment technologies and on the feasibility of meeting discharge criteria. A year later, EPA's treatability study is unfinished. EPA has only completed the low flow portion of the study, and the reliability of this data is in serious question because EPA allowed the samples to "age" before they were treated and analyzed. More to the point, EPA apparently has never shared with Earth Tech the results of the low flow treatability study, even though EarthTech was the contractor that had collected the samples in the first place. Exhibit 11, Technical Response at pp. 12-13. Thus, EPA authorized Earth Tech to create its design without the benefitof any treatability data.

Also, EPA has moved forward with its final design without the benefit of the information that is being obtained through CBS's hydraulic conduit study and other investigations. Thus, EPA may be spending almost two years and $5.4 million to build a permanent system in the wrong location. As part of its investigations, CBS is evaluating alternative locations for a treatment system. If CBS is able to divert the flow of ground water so that clean water does not come into contact with PCBs, then it may be more effective to locate a smaller capacity treatment system closer to the landfill itself. CBS is also trying to determine if there is a separate conduit of contaminated ground water that by-passes Illinois Central Spring and emerges further downstream at Quarry Spring. If that is the case, Quarry Spring would be a better location for a final treatment system than Illinois Central Spring. But if EPA builds its $5.4 million permanent and immovable system at Illinois Central Spring, both of those options will be lost before the information is available to evaluate them. Although EPA originally indicated it would try to design a system comprised of skid-mounted equipment that could be moved to another location, its new design is for permanent fixed equipment. Indeed, Earth Tech, EPA's design contractor recently admitted that it had been unaware of EPA's prior intention to use skid mounted equipment, and that the pipes and tanks, which make up a substantial portion of the system itdesigned, will be immovable. Exhibit I l, Technical Response at p.2.

Also, the system has been designed without the benefit of the information that will become available after the excavation work is completed at the sites and surface water control measures are implemented. The volume and flow patterns of the contaminated water may be very different at that time.

3. EPA's Decision to Build a Full-Scale Final System Contradicts its Prior Representations to the Court

EPA's current approach of prematurely trying to design a final system contradicts theposition previously taken by the federal government before the Special Master and incorporated inthe Special Master's Report. As recently as January 13, 1999, EPA's lawyer, Steven Ellis, in aletter to the Special Master, explained EPA's reasons why the effort to design a final watertreatment system should be deferred until after excavation is complete:

If EPA were required to select at this time the permanent water treatment aspects of a remedial action for Lemon Lane and Neal's Landfill, EPA would have to select a more conservative and costly water treatment solution than what may be required after excavation is complete. For those reasons, the United States proposed that the determination of permanent water treatment solutions for Lemon Lane and Neal's Landfill be postponed until approximately one year following completion of source control measures at those sites.

But EPA's $5.4 million system - with two enclosed retention tanks, 9,500 gpm of pumping capacity, three different types of filters, a structure built to last 20 years, and a paved roada nd parking lot - is precisely the type of "costly and conservative water treatment solution "that Mr. Ellis said EPA was not planning to build before excavation was complete.

Indeed, what EPA has actually done is to adopt the design principles originally proposed by the City of Bloomington: build a costly permanent water treatment system first, and then down-size it later when many of its expensive features prove to be unnecessary. SeeExhibit 1, at p. 2.

3. EPA's Decision Abuses its Statutory Authoritv under CERCLA

EPA's plan to build this system, with a capital cost of at least $5.4 million over almost two years, is inconsistent with CERCLA and the NCP. In building this treatment system, EPA is purportedly acting under its "removal" power, rather than its "remedial" authority. But EPA's decision to build this $5.4 million system is an egregious abuse of that power.

In CERCLA, Congress carefully distinguished between the two types of response action authorities it gave to EPA: the first is the power to select long term remedies on the basis of detailed investigations and feasibility studies; the second is to take short term emergency"removal" measures. See CERCLA _ 101(23), (24), 42 U.S.C. _ 9601(23), (24). Typical"removal" actions include: emergency cleanup activities after the derailment of a tankcar or the overturning of truck containing hazardous substances, fighting chemical fires, transporting abandoned drums of chemical wastes to landfills, and providing short term alternative drinkingwater supplies. But Congress did not intend for EPA to use its removal power to undertake long term remedial measures, so it put in the statute express limitations on how much money EPA can spend on a removal action and how long such an action can last. Under section 104(c)(1) of CERCLA, 42 U.S.C. _ 9604(c)(1),Congress precluded EPA from undertaking a removal action that lasts longer than one year or involves spending more than $2 million. Here, EPA has embarked on a purported removal action that will cost $5.4 million and has adopted a construction schedule to last nearly two years. Thus, on its face this project cannot be squared with the statutory limits on EPA's removal powers. Moreover, this $5.4 million cost is equal to about a third of EPA's $18 million budgeted to be spent on removal actions in a year in the entire six state area served by EPA Region 5, not just Indiana.

The statute allows a removal action to exceed the $2 million and one year limits if (1)"response actions are immediately required to prevent, limit or mitigate an emergency," (2)"there is an immediate risk to human health, welfare or the environment," and (3) "such assistance would not otherwise be provided on a timely basis." 42 U.S.C. _ 9604(c)(1), see also the NCP at 40 C.F.R _ 300.415(b)(5). But these criteria have not been met with respect to EPA's decision to spend almost two years and at least $5.4 million building this system.There is no immediate risk to human health that justifies emergency action. EPA has been aware of PCBs in Illinois Central Spring and Clear Creek since well before 1985. Indeed, the State ofIndiana "do not eat" Fish Advisories have been in effect for Clear Creek since 1978. But EPA has not seen reason to act in all those years. Moreover, recent data show a decline in PCB levels in fish in Clear Creek that would justify the State of Indiana reducing the severity of its outdated Fish Advisories. Finally, the available information indicates that fish from Clear Creek are generally too small to eat and that Clear Creek is not fished extensively, if at all.

Even if emergency conditions did exist, EPA's proposed action of taking almost two years to design and build a treatment system is not an immediate response; rather, EPA i allowing the conditions it claims constitute an emergency to persist unabated for almost two years. If EPA truly intended to treat this situation on an emergency basis, it would have accepted CBS's original proposal of installing a gravity-based interim system that could have been operational in a matter of weeks. Indeed, if this were truly an emergency, then EPA is not doing anything on "a timely basis."

In reality, what EPA is doing is abusing its removal power by using it as a shortcut to taking a remedial action without going through the necessary procedural and substantive steps required for taking a remedial action. 4.   EPA's Design to Build its Final System Now without Complete Information Forecloses the Possibility of Meaningful Negotiations About Final Water Treatment After the Excavation Work is Completed

EPA's decision to build a final treatment system, before having all the information necessary to do so, is inconsistent with the two-phase negotiation schedule about water treatment that the federal government had proposed to the Court, and that the Special Master had incorporated into his Report of January 20, 1999.

In his January 13, 1999 letter to the Special Master, Mr. Ellis noted that that the federal government preferred to defer permanent water treatment negotiations until excavation at Lemon Lane Landfill and Neal's Landfill was complete:

The parties then advised the Special Master of their agreement to negotiate water treatment in two phases; the Special Master agreed that the proposed process is desirable. By metaphor, the Special Master explained that there is significant advantage to "taking the cancer out of the body and letting the body stabilize" before determining what further treatment, if any, is necessary.

The Special Master incorporated this concept of a two-phase negotiation process in paragraph no. 3 of his Recommendations to Judge Dillin of January 20, 1999, calling for negotiations over permanent water treatment during the first year after excavation work is complete. Judge Dillin, in turn, adopted Recommendation no. 3 verbatim as paragraph no.3 in his Order of February 1, 1999, approving the Special Master's Report and Recommendations.Yet less than two months later, on March 25, 1999, EPA unveiled its new design for what is truly a permanent system, without waiting for the information that would only become available after excavation is completed.

EPA's decision to build a permanent treatment system before full information is available will essentially make the future negotiations about permanent water treatment meaningless. Even if the data that is later developed shows that a system would be more effective and efficient were located nearer to the landfill or further away at Quarry Spring, EPA will dispute that data simply because accepting that conclusion would mean admitting that it had spent $5.4 million building a permanent, immovable system in the wrong location. Similarly, if the data shows that a permanent system would be just as effective and less costly with a smaller pumping or retention capacity, EPA will reject that data as well, because to accept such a conclusion would be to admit that it paid too much to build a white elephant.

Throughout those future negotiations, EPA's principal interest is not likely to be to try to develop a more effective and efficient system, but to try to get CBS to pay for the costly system EPA had already built and to take over the operation of that system, with its inefficiencies and inflated operating costs. By contrast, CBS will be reluctant to pay for an over designed system that is too costly and inefficient, CBS will also object to incurring the excessive operating costs and compliance problems that would result from operating a system that was so inefficiently designed.

In other words, because of EPA's actions, those negotiations are less likely to involve true technical deliberations, and more likely to result in a standoff between CBS, trying to develop a final system that is efficient and effective, and EPA, trying to get CBS to pay for its $5 4 million white elephant. Indeed, CBS has already had a taste of what these future negotiations will be like. Both at the meeting on June 1, 1999 and in Mr. Cahn's letter of June 21, 1999, the Agency demanded that CBS reimburse it the $1 million EPA spent on design and site preparation costs as a precondition before EPA would seriously consider alternatives to its design or otherwise allow CBS to participate in the project. As EPA spends its $5.4 million (and more) on its prematurely designed final system, it will become less and less interested in finding the most efficient and cost effectivemeans of treating the water, and more and more interested in trying to get its money back.

Although CBS has agreed to negotiate in good faith about final water treatment, if such treatment is necessary, CBS has also reserved its defenses to any cost recovery action. In particular, CBS has reserved its arguments that the United States is precluded from bringing acost recovery action against CBS under paragraph 111 of the Consent Decree. The Special Master's Report of January 20, 1999, specifically noted on page 5 that CBS's arguments under the Covenant Not to Sue have been preserved with respect to water treatment issues. It continues to be CBS's preference, as it has been throughout the remedial selection process, to work with the other parties to select technically justified and cost-effective alternatives. Where such alternatives have been selected, CBS has consistently implemented them in an expeditious and professional manner. See pp. 4-5, supra. CBS intends to continue to approach remedia lissues in that manner. But under the Consent Decree, CBS is protected from being compelled to pay for a cleanup alternative to which CBS has not consented. CBS has certainly not consented to EPA's water treatment system at Illinois Central Spring and cannot be compelled to pay for it. Moreover, CBS has compiled a substantial record that EPA's decision about this system not only violates CERCLA and the NCP, but also is just plain wrong.

CONCLUSION

While CBS has made a substantial case that EPA has not only violated its governing statute and regulations, but has acted in contravention of the representations it has made to this Court, CBS is not requesting the Court's intervention at this time. Rather, CBS is making a record to preserve its defenses if and when EPA tries to bring a cost recovery action against it. EPA should be on notice that in pursuing this misguided effort, it is simply wasting taxpayer money.

Respectfully submitted,

David R. Berz David B. Hird
Well, Gotshal & Manges LLP
1615 L Street, N.W.
Washington, D.C. 20036
(202)682-7000

and

Joseph B. Carney
Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
(317) 237-0300
Counsel for CBS Corporation



FOOTNOTES

1.   The City of Bloomington did not agree with this approach initially. Instead, the Citywanted to have a full-scale system built as soon as possible and then to turn offthe partsof the system that proved to be unnecessary in operation after the money had alreadybeen spent to build them. The City threatened to withdraw its prior consent to thenegotiated excavation remedy at Lemon Lane Landfill if this approach was not followed.See Letter of Geoffrey M. Grodner to David R. Berz of August 10, 1998 (copy attachedas Exhibit I )

2.   The State of Indiana uses a level of 1900 ppb of PCBs in edible fish tissue to establish a Level Five Fish Advisory. EPA's own 1997 data showed 446 ppb of PCBs in rock bass, 1620 ppb of PCBs in spotted sucker, and 872 ppb of PCBs in largemouth bass. State samples from 1997 also showed levels below 1900 ppb of PCBs for all these species, except spotted sucker.

3   EPA's cost estimates for this project are confusing. But CBS officials who attended this meeting recall that EPA described the cost of the project as $5.4 million, and understood this number to represent the capital cost.

4   At this point, CBS was awaiting complete technical information about EPA's design. EPAdid not have all the information available at the March 25, 1999 meeting, and had beenproviding information to CBS piecemeal over the weeks following the meeting. 5.   Although the system is scheduled to be installed in the spring of the year 2000, EPA plans toevaluate it as a "final" system in the year 2001. In essence, EPA appears to be planning tobuild the so-called "interim" system over two years and then subject it to a one-yearevaluation period before calling it a final system.
6   EPA now takes the position, as reflected in the words of its contractor Earth Tech, that the costestimate that EPA used in its presentation to the Court on August 14, 1998 and as a basis fordecision-making in its Action Memorandum "does not appear to address the feasibility ofimplementing the purported concepts, nor does it appear to adequately address the necessary facilities and equipment needed to effectively contain and treat the potential loadings that are anticipated." Exhibit 11, Technical Response at p. 10.

7.   Also, the evidence is strong that this portion of Clear Creek is not heavily used, if at all, for thepurposes of fishing. See Exhibit 5, at pp. 12- 14.

8. EPA has also violated the Due Process Clause and the NCP by not providing CBS with ameaningful opportunity to submit formal comments on the record. See United States v. SeymourRecycling Corp., 679 F. Supp. 859, 864 (S.D. End. 1987) (Due Process requires EPA toallow a potentially responsible party to submit written comments on a proposed response action"at a meaningful time, in a meaningful manner"); accord, United States v. Rohm & Haas Co..Inc., 669 F. Supp. 672, 683 (D.N.J. 1987). The NCP expressly provides that EPA shouldsolicit public comments, including comments from potentially responsible parties, in connectionwith a decision to undertake a removal action. 40 C.F.R. __ 300.415(n), 300.820. So far, EPAhas not solicited public comments about either of its designs for a water treatment system.Indeed, Mr. Cahn's letters of April 12 and May 3, 1999 (Exhibits 6 and 8) took the positionthat EPA was not open to consideration of CBS's technical comments on its new design, butrather was only interested in whether CBS would build and pay for the system that EPA haddesigned.

9   For a summary of this argument, see pages 2-5 of the Letter from David R. Berz to Jeffrey A. Cahn, dated November 10, 1998, attached as Exhibit 5.