UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 5 REGION 4? ATLANTA FEDERAL CENTER 61 FORSYTH STREET PflO^ ATLANTA, GEORGIA

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2 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 5 REGION 4? ATLANTA FEDERAL CENTER 61 FORSYTH STREET PflO^ ATLANTA, GEORGIA Mr. Joseph G. Nassif Husch & Eppenberger, JJLC 190 Carondelet Plaza, Suite 600 St. Louis, Missouri July 11, 2005 RE: Anniston PCB Superfund Site Dispute Resolution under Partial Consent Decree EPA Final Decision Resolving Dispute pursuant to Paragraph 26.a. Dear Mr. Nassif: This letter constitutes EPA's final decision resolving the dispute pursuant to Paragraph 26.a. of the Partial Consent Decree ("PCD") with respect to the dispute raised by Solutia, Inc. and Pharmacia Corporation ("Defendants") on November 17, 2004, under Section VTJJ of the PCD. Although it appears that the Court ruled on the issue in dispute in its June 30, 2005, Order, the Legal Special Master, Mr. Doug Jones, asked EPA to submit its final decision in accordance with the provisions of the PCD in his July 5, 2005, which you also received. The positions and factual and legal arguments contained in the United States' numerous pleadings and memoranda on the issue in dispute, as well as, EPA's June 6, 2005, Statement of Position accurately reflect EPA's position on the matter in dispute and shall serve as EPA's final decision. As the Division Director of the Waste Management Division of EPA Region 4,1 can unequivocally state that EPA would not have agreed to sign the PCD if EPA was abrogating its ability to pursue and settle with other responsible parties and to obtain additional cleanup work in Anniston. The clear language of the PCD and the CERCLA statute fully support this conclusion. i Additionally, you raised a new issue in your June 29,2005, Memorandum to the Court. In your Memorandum, you claimed that the court's decision in United States v. Charter Int'l Oil Co.. 83 F.3d 510 (1 st Cir. 1996), was relevant to the instant matter. Quite to the contrary, that decision is inapposite to the facts here. In that case there was no question that the proposed settlement document provided contribution protection. Id. at 517. Unlike the present case, there was no debate that EPA had the ability to settle with other parties that would impact a prior settlor's "reserved" contribution rights. The only issue before the court was the extent of contribution protection afforded by the proposed settlement document. In that case, there were no "matters addressed" defining the scope of the contribution protection and EPA and the court agreed as to the appropriate scope of contribution protection to be afforded. Further, that case, did not involve a de minimis settlement as the proposed AOC here does. It was the settling party who disagreed with EPA and the court. Internet Address (URL) Recycled/Recyclable Primed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% Postconsumer)

3 In your Memorandum, you characterize the Defendants to the PCD as "early settlors" and 0 **r»r*niirlinrr «MtK t^*^ 1ot/ar p<atf1ir>ft r\artic*c tr\ tvw r\t*tr\ m *r\t r\ rp\a"ff*n rlon tol V\\/ ' ' ' ' ' ' ' - ' " ' gratuitously offering them a c?e minimis settlement on the Anniston PCB Site." First, as the only major contributors of PCBs to the Anniston area discovered to date, the Defendants are in no way an "early settlor". The term "early settlor" presupposes that there are other major noncooperative parties. With respect to PCB contamination, that is not the case. In fact, the Defendants are the only identified potentially responsible party for lead contamination that has not settled its lead liability with EPA. Second, the evidence compiled by EPA supports EPA's determination that the settling parties to the proposed AOC are indeed de minimis, and that the settling parties will be contributing at least their fair share to the cleanup of the Anniston PCB Site. EPA has not gratuitously granted the settling parties anything. CERCLA requires that they be treated as such. The Defendants have had ample opportunity to submit contrary evidence to EPA and will have an additional opportunity during the public comment period for the proposed AOC. Pursuant to Paragraph 26. a. of the PCD, Defendants have twenty (20) days from receipt of this Final Decision to file and serve a motion for judicial review of this decision. Should you have any questions regarding these matters, you may contact Mike Stephenson, Associate Regional Counsel, at (404) , or Bill Weinischke with the Department of Justice at (202) Sincerely, cc: Bill Weinischke, DOJ Doug Jones, Legal Special Master Thomas Dahl, Technical Special Master Winston A. Smith Director Waste Management Division

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5 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY [ REGION 4? ATLANTA FEDERAL CENTER 61 FORSYTH STREET "'- * PRO^O> ATLANTA, GEORGIA June 6, 2005 VIA OVERNIGHT COURIER AND FACSIMILE TO (314) Mr. Joseph G. Nascif Husch & Eppenberger, LLC 190 Carondelet Plaza, Suite 600 St. Louis, Missouri RE: Anniston PCB Superfund Site Dispute Resolution under Partial Consent Decree EPA Statement of Position pursuant to Paragraph 24.b. Dear Mr. Nassif: This letter constitutes EPA's Statement of Position pursuant to Paragraph 24.b. of the Partial Consent Decree ("PCD") with respect to the dispute raised by Solutia, Inc. and Pharmacia Corporation ("Defendants") on November 17, 2004, under Section VILT of the PCD. EPA continues to maintain that Defendants' Statement of Position was untimely served pursuant to the express terms contained in Section VLII of the PCD and that the period of dispute has expired with the position advanced by EPA being binding on the Parties. 1 Nevertheless, in compliance with the Court's order of June 2, 2005, EPA is providing this Statement of Position as a protective measure and is expressly reserving and is not waiving its claim that Defendants have failed to timely serve their Statement of Position on the United States, and that the position advanced by EPA is binding. As stated in the Court's June 2, 2005, Order, the issue in dispute is "the meaning of the contribution provisions of the Consent Decree." (Emphasis added). Defendants have attempted in their various pleadings to mischaracterize the issue in dispute as EPA's negotiations with the Settling Respondents to the proposed administrative agreement. The dispute resolution section of the Consent Decree "is only applicable to requirements that are contained in the Consent 'The United States' position on the timeliness of Defendants' service of its Statement of Position on the United States is set forth in the numerous pleadings before the Court, including the United States' Notice of Compliance and Status Report filed with the Court on May 2, Those arguments are incorporated by reference and are not repeated here. Internet Address (URL) Recycled/Recyclable.Printed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% Poslconsumer)

6 Decree..." PCD, Paragraph 21. EPA's negotiations with third parties are not "requirements" of the Consent Decree. As required by the Court's Order, the dispute addressed by EPA in this Statement of Position is "the meaning of the contribution provisions of the Consent Decree." Defendants' interpret the contribution provisions of the PCD to prohibit EPA from settling with other potentially responsible parties which may impair Defendants' contribution claims. The PCD contains no prohibition on the United States from negotiating cleanup agreements v/ith other Potentially Responsible Parties (PRFs), even if such an agreement impairs Defendants' contribution rights. The rights the Defendants' reserved are provided by Section 113(f) of CERCLA, 42 U.S.C. 9613(f), which also contains limitations on those rights. Specifically, Section 113(f)(3)(C) states that Defendants' contribution rights shall be subordinate to the rights of the United States. Courts that have construed Section 113(f)(3)(C) have all held that where parties who previously settled with the United States are suing parties in contribution that the United States is also pursuing, the rights of the previously settling parties are subordinate to the rights of the United States. Additionally, the Defendants' right to maintain a contribution lawsuit against parties who settle with the United States is subject to specific limitations in Sections 113(f) and 122(g) and (h), 42 U.S.C. 9613(f) and 9622(g) and (h). EPA hereby incorporates all pleadings, motions, hearing transcripts, and other filings which make up the record before the Court pertaining to entry of the PCD (Documents Numbered 1, 2, 5, 6, 7, 11, 13, 14, 15, 16, 17, 18, 19, 22, 24, 26, 27, 28, 36, 41, 43, 46, 52, 53, 61, 62, 63, 64, 66, 67, 68, and 71 on the Civil Docket for the case), as well as, all of the United States pleadings, motions, and arguments pertaining to the matter in dispute (Documents Numbered 123, 124, 127, 136, 141, and 142 on the Civil Docket for the case and the transcript from the hearing on June 1, 2005). The evidence in the record clearly shows that the PCD, CERCLA, and the caselaw interpreting CERCLA support EPA's position that the PCD does not, in any fashion, limit or prevent EPA from negotiating and/or settling with other potentially responsible parties. Indeed, it is inconceivable that the United States would have agreed to a partial settlement with Defendants that prohibited EPA from settling with other potentially responsible parties for additional environmental cleanup work in Anniston. The PCD expressly supports EPA's position. Paragraph 32 of the PCD states "Notwithstanding any other provision of this Consent Decree, the RI/FS Agreement, the NTC Removal Agreement and/or the Removal Order, the United States retains all authority and reserves all rights to take any and all response actions authorized by law." Paragraph 4 of the PCD states "Unless otherwise expressly provided herein, terms used in this Consent Decree which are defined in CERCLA or in regulations promulgated under CERCLA shall have the meaning assigned to them in CERCLA or in such regulations." Section 101(25) of CERCLA defines the terms "response" to mean "remove, removal, remedy, and remedial action;, all such terms (including the terms "removal" and "remedial action") include enforcement activities related thereto." Hence, the PCD which Defendants signed on October 16, 2002, almost a year before Defendants filed their contribution action, was absolutely clear that irrespective of any

7 other provisions in the PCD, the United States had then, and continues to have now, the authority and right to take the precise enforcement actions against other potentially responsible parties that EPA now proposes to undertake with the proposed administrative settlement. 2 There is absolutely no mistaking the clear and express terms of the PCD. Defendants apparently ignore the clear language of Paragraph 32 of the PCD, and rely on two paragraphs of the PCD (Paragraphs 38 and 42) that generally state that the Defendants reserve or retain the:r rights to contribution under CERCLA. 3 EPA agrees. The Defendants' rights to contribution, whatever they may be, are granted by Section 113(f) of CERCLA, and are reserved or retained in the PCD. But the PCD did not create a new right of contribution for the Defendants, different than those provided by the statute. That is not possible. The contribution rights CERCLA grants and which the Defendants retained are unquestionably subordinated to the United States' rights to pursue other parties and do not include a right for Defendants to maintain a contribution action against parties who settle with the United States. In numerous paragraphs in the PCD, the United States also reserved and retained all of its rights under CERCLA. The language of the PCD is clear and unambiguous in these reservation sections. In the PCD, both Plaintiff and Defendants reserved their respective rights to pursue other parties as provided in CERCLA. However, CERCLA Section 113(f)(3)(C) is absolutely clear that when both the United States and parties it previously settled with pursue the same other persons, the United 2 The Court's June 2, 2005, Order states that the Defendants filed their contribution action two months before the PCD was approved. Defendants signed the PCD over 14 months before filing their contribution lawsuit. The PCD was first lodged with the Court on March 25, (Documents Number 1 and 2 on the Civil Docket for the case) The Revised PCD, which changed none of the provision currently under dispute, was lodged with the Court on October 16, (Documents 13 and 14 on the Civil Docket for the case) The date of the Court's approval is irrelevant. The Defendants agreed to the terms in dispute and asked the Court to approve the PCD more than 14 months prior to filing their contribution action in June of Defendants also rely on language in Section I, Page 2, of the NTC Removal Agreement which states that EPA acknowledged that Defendants "may" seek contribution for residential properties with lead in excess of 400ppm that Defendants clean up. That is true, but the language immediately preceeding that statement provides that "EPA is in the process of identifying potentially responsible parties (PRPs) under CERCLA..." This language makes clear that Defendants knew that EPA was in the process of pursuing other PRPs, and the statutory consequences of EPA's enforcement actions on Defendants' potential claims for contribution are clearly spelled out in Section 9613(f)(3)(C) of CERCLA. A final provision relied upon by Defendants is the statement in the Statement of Work to the RJ/FS Agreement which states that the RI will be used to "identify any other Potentially Responsible Parties that may be involved." This language supports EPA's position that Defendants had clear knowledge that EPA was investigating other PRPs with the intention to take some action with respect to such parties.

8 States' rights are superior. 4 The case law and the legislative history are equally clear and unambiguous on this point. In sura, the PCD reserved the Parties' statutory rights, not just the Defendants' rights. The rights the United States reserved are superior. Sections 9613(f)(2), 9622(g)(5), and 9622(h)(4) of CERCLA entitle parties who settle with the United States to protection from contribution claims for matters addressed in the settlement. Sections 9613 and 9622 of CERCLA require that settling parties "shall not be liable for claims for contribution regarding matters addressed in the settlement." Hence, CERCLA gra:i'.s the settling parties to the proposed administrative agreement contribution protection for matters addressed in the proposed administrative agreement. In the PCD, the United States did not, and could not, bargain away third parties' statutory entitlement to the contribution protection afforded by CERCLA in Sections 9613(f)(2), 9622(g)(5), and 9622(h)(4). There is no language in the PCD expressing that parties who subsequently settle with the United States shall not be afforded the contribution protection provided by Section 9613(f)(2), 9622(g)(5), or 9622(h)(4). Even if there was, such language would be in conflict with the statute. The contribution rights Defendants retained in the PCD are those granted by CERCLA. The contribution rights granted by CERCLA do not include the right to pursue contribution claims against parties who settle their CERCLA liability with the United States. During the hearing in this case on June 1, 2005, the Court stated that the Defendants and the Court believed "that the Defendants rights to contribution would continue after this consent decree was signed by [the Court] to the same extent and degree as they existed before the decree." Transcript, page 22. This is entirely true. Defendants' rights to contribution are the same now as they were before the PCD was entered by the Court. However, those rights are clearly limited by CERCLA. See 42 U.S.C. 9613(0(2), (f)(3)(b), (f)(3)(c), 9622(g)(5), and 9622(h)(4). As noted above, those rights are explicitly inferior to the right of the United States to pursue the same person pursuant to Section 9613(f)(3)(c). With respect to Defendants' claims that they were not aware of the terms of the PCD that would allow EPA to pursue other parties, there can be no conclusion other than the Defendants entered into the PCD with full knowledge of the clear and express terms of the PCD and the statutory limitations on Defendants' rights to seek contribution. 5 The PCD was scrutinized by "Defendants argue that Section 9613(f)(3)(C) is inapplicable to this matter because there is no "action" as described in Section 9613(f)(3)(C). Defendants are wrong because Section 9613(f)(3) applies to "any action." Hence, section 9613(f)(3)(C) applies equally to judicial and administrative actions. EPA's proposed administrative agreement is an administrative action and Defendants' contribution action is a judicial action. Both actions satisfy the "any action" requirement of Section 9613(f)(3)(C). 5 Although the Court seemed to find in its June 2, 2005, Order that the Defendants would not have agreed to the PCD in the absence of a clause preserving their rights to contribution from other Potentially Responsible Parties (PRPs) for contamination of the Anniston PCB Site, there

9 the Court for a year due to allegations by tort plaintiffs that the United States had given the Defendants a "sweetheart deal" in the PCD. TTe United States defended the PCD on the grounds that the PCD contained all of the relief the United States was entitled to under CERCLA and that the PCD gave up nothing inappropriate to the Defendants. Relinquishing the United States' ability to pursue and settle with other parties would have been absolutely inappropriate, not in the public interest, and contrary to CERCLA and the purposes behind it. The Defendants clearly knew what terms were contained in the PCD and understood the statutory scheme underlying CERCLA. This conclusion is fully supported by the fact that the attorney who negotiated the..pcd for Defendants, Mr. Allan J. Topol, is the co-author of a treatise entitled Superfund Law and Procedure in which he discusses the limited nature of the contribution rights afforded by CERCLA. Mr. Topol's treatise cites two cases which the United States has already provided to the Court regarding the very issue in dispute. Those two cases, U.S. v. Browning-Ferris Industries. 19 CWLR 436 (M.D. La. 1989) and U.S. v. Bay Area Battery. 895 F.Supp (N.D. Fla. 1995), stand for the proposition that Defendants' rights to pursue contribution against other responsible parties are subordinate to the rights of the United States to pursue and settle with those same parties. Without such subordination, polluters, such as Defendants, could frustrate EPA's obligation of protecting public health and the environment. EPA is not addressing in this Statement of Position the various factual and evidentiary exhibits attached to Defendants' Statement of Position. Those exhibits relate directly to the underlying basis of EPA's determination to enter into the proposed administrative agreement and the merits of Defendants' contribution claims. Those exhibits are not relevant to the issue in dispute. EPA has compiled, and continues to compile, an extensive administrative record which, after consideration of public comments, will form the basis of EPA's final decision whether to make the proposed agreement effective. 6 Should a Court determine that EPA's action is subject to review and requires such, the administrative record supporting such action will be made available to the reviewing tribunal. Finally, the Court stated in its June 2, 2005, Order that the dispute is proceeding under Paragraph 26 of the PCD which entails disputes which are not afforded review on an administrative record. EPA agrees that the dispute, as stated by the Court and addressed herein, is a dispute of legal interpretation and as such Paragraph 26 is applicable. However, should the is absolutely no evidence in the record that supports such a finding. While counsel for Defendants, Mr. White, made that statement in response to a question from the Court, Mr. White's statement is not evidence. Statements of counsel are not evidence. Moreover, Mr. White's statement is inconsistent with the fact that the Defendants did indeed enter into the PCD knowing full well that any contribution rights they may enjoy under CERCLA are subject to statutory limitations. 6 In addition to the longstanding rule of law that administrative actions cannot be reviewed until they are final, EPA believes that Sections 113(h) and 122(g)(ll) limit judicial review of the proposed administrative agreement even when final.

10 Court determine that the proposed AOC itself and the basis for EPA's entry into the proposed AOC is somehow part of the present dispute, then EPA belie /es that Paragraph 25, relating to disputes afforded review on the administrative record, is applicable. Pursuant to Paragraph 24.b., Defendants have fourteen (14) days from receipt of this Statement of Position to submit a reply if Defendants so choose. Subsequently, pursuant to Paragraph 26, the Director of the Waste Management Division for EPA Region 4 will issue a final decision resolving the dispute. Should you have any questions regarding these matters, you may coiiiact me at (404) , or Bill Weinischke with the Department of Justice at (202) Sincerely, cc: Bill Weinischke, DOJ Doug Jones, Legal Special Master Thomas Dahl, Technical Special Master Mike Stephenson Associate Regional Counsel

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12 FILED 2004 Nov-22 PM 02:06 U.S. DISTRICT COURT N.D. OF ALABAMA IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA UNITED STATES OF AMERICA Plaintiff, CIVIL ACTION NO. CV-02-C-0749-E v. PHARMACIA CORPORATION (p/k/a Monsanto Company) and SOLUTIA INC., Defendants. UNITED STATES' MOTION TO STRIKE LETTER FROM DEFENDANTS TO COURT I. Introduction For the reasons set forth below, the United States respectfully requests that the Court strike the letter dated November 17, 2004, sent from Counsel for Defendants, Mr. J. Mark White, to the Honorable U. W. Clemon. In their letter, the Defendants claim to invoke the dispute resolution provisions of the Consent Decree under the false premise that the Environmental Protection Agency ("EPA") is attempting to alter the Defendants' rights under the Consent Decree. II. Argument A. There is no dispute under the Consent Decree In their letter, Defendants improperly claim that they are invoking the informal negotiation provisions of the dispute resolution process under the Consent Decree because settlement

13 discussions regarding the Anniston Lead Site will alter the Defendants' rights under the Consent Decree, particularly their right to claims for contribution. However, the mere fact that EPA is involved in ongoing negotiations at the Anniston Lead Site does not in any way give rise to any dispute between EPA and the Defendant's under the Consent Decree for the Anniston PCB Site. 1 Therefore, Defendants' invocation of dispute resolution under the Consent Decree is improper. As indicated in Defendant's letter, EPA has been negotiating a settlement with a group of potentially responsible parties for the Anniston Lead Site. This group of potentially responsible parties includes both Solutia and Pharmacia due to releases of lead into the environment from their corporate predecessor's (Monsanto) Anniston plant. Until Defendants' November 17, 2004, letter was received, EPA believed that Solutia and Pharmacia were likely parties to any settlement that may ultimately be reached for the Anniston Lead Site. The United States now assumes that Defendants' letter represents either a decision by the Defendants not to participate in any settlement for the Anniston Lead Site or a thinly veiled attempt to improve their negotiating posture with EPA and the other potentially responsible parties. Clearly, the dispute resolution provisions of the Consent Decree are not 1 The Anniston Lead Site includes residential properties in and around Anniston, Alabama which contain lead. Many of the properties that make up the Anniston Lead Site also contain PCBs and therefore, there is some overlap between the Anniston Lead Site and the Anniston PCB Site.

14 the appropriate mechanism for negotiating a settlement at another Superfund site. Further, contrary to Defendants' assertion, EPA is not attempting to take away Defendants' "bargained for" rights to contribution under the Consent Decree. By law, any potentially responsible parties who enter into a settlement with EPA for the Anniston Lead Site are entitled to protection from contribution actions. 2 While the Consent Decree acknowledges the Defendants' statutory right to seek contribution, it in no way prohibits EPA from fulfilling its statutory mandate to force other responsible parties to conduct additional clean up work in Anniston, Alabama. Apparently, the Defendants seem to be taking the absurd position that EPA is prohibited by the Consent Decree from negotiating clean up settlements with other potentially responsible parties. In any event, whatever concerns that the Defendants may have regarding a potential settlement for the Anniston Lead Site, those concerns are certainly not disputes under the Consent Decree approved and entered by this Court. Therefore, the Defendants attempt to invoke dispute resolution under the Consent Decree is misplaced. Additionally, EPA has kept the Legal Special Master, Mr. Doug Jones, generally apprised of EPA's ongoing efforts related to the Anniston Lead Site, and EPA is amenable to providing additional information to Mr. Jones if requested. 2 See CERCLA Section 113(0(2) and 122(h)(4).

15 B. Defendants' NovemberlV, 2004 letter to the Court undermines the dispute resolution provisions of the Partial Consent Decree As stated above, there is no current dispute under the Partial Consent Decree between the parties. However, even if there was a dispute, the Dispute Resolution provision of the Partial Consent Decree (Section VIII.) requires the parties to attempt to resolve any disputes outside the Court, and to only seek Court involvement as a last resort. Paragraph 23 of Section VIII. states that "any dispute which arises under or with respect to this Consent Decree shall in the first instance be the subject of informal negotiations between the parties to the dispute. The period for informal negotiations shall not exceed twenty (20) days from the time the dispute arises, unless it is modified by written agreement of the parties to the dispute. The dispute shall be considered to have arisen when one party sends the other parties a written Notice of Dispute." Defendants never provided the United States such a written Notice of Dispute as mandated by the Consent Decree. Furthermore, paragraph 24(a) of Section VIII. states that "in the event that the parties cannot resolve a dispute by informal negotiations under the preceding Paragraph, then the position advanced by EPA shall be considered binding unless, within twenty-eight (28) days after the

16 conclusion of the informal negotiation period, Defendants invoke the formal dispute resolution procedures of this Section by serving on the United States a written Statement of Position on the matter in dispute, including, but not limited to, any factual data, analysis or opinion supporting that position and any supporting documentation relied upon by the Defendants. The Statement of Position shall specify the Defendants' position as to whether formal dispute resolution should proceed under Paragraph 25 or Paragraph 26." Paragraph 24(b) then requires EPA, within twenty-eight (28) days after receipt of Defendants' Statement of Position, to serve on Defendants its Statement of Position, including, but not limited to any factual data, analysis, or opinion supporting that position and all supporting documentation relied upon by EPA. In addition, EPA's Statement of Position shall include a statement as to whether formal dispute resolution should proceed. Defendants then have fourteen (14) days to submit a reply to EPA's Statement of Position. Only after the foregoing provisions have been fully exhausted and the parties have been unable to resolve the dispute, is it appropriate for the dispute to be submitted to the Court. The purpose of the Dispute Resolution provisions of the Consent Decree is to not burden the Court with disputes until the

17 parties have made every effort to resolve the dispute on their own. That is precisely why the Consent Decree sets out a detailed mechanism for resolving disputes. Here, before notifying EPA, the Defendants have foisted their alleged dispute on the Court in direct violation of the Dispute Resolution requirements that they agreed to and the Court approved. C. This Court previously ordered that no letters shall be submitted to the Court asking for Court action. By Order dated March 19, 2004, this Court stated that "Both parties and interested non-parties shall refrain from submitting letters to this Court containing legal arguments or requests for Court action." In their letter, the "Defendants ask the Court and its General Special Master, Doug Jones, and Technical Special Master, Tom Dahl, to provide assistance during this informal negotiation period." Arguably, the Defendants are asking for court action, and hence, the letter violates this Court's March 19, 2004, Order. Conclusion For the reasons mentioned above, the United States respectfully requests that the Court strike Defendants' letter of November 17, 2004.

18 Respectfully submitted, Thomas L. Sansonetti Assistant Attorney General Environment & Natural Resources Division William A. Weinischke, Senior Attorney Environmental Enforcement Section Environmental and Natural Resources Division U.S. Department of Justice P.O. Box 7611 Washington, D.C (202) CERTIFICATE OF SERVICE This is to certify that a copy of the foregoing Motion to Strike of the United States has been served upon the following counsel, by mailing the same by first class United States mail, properly addressed and postage prepaid, on this the of November, 2004: Special Master G. Douglas Jones nd Avenue, North Birmingham, Alabama Christopher H. Buckley, Jr. Gibson, Dunn & Crutcher, L.L.P Connecticut Avenue, N.W. Washington, D.C Cathleen S. Bumb Assistant General Counsel - Environmental Solutia, Inc. 575 Maryville Drive St. Louis, Missouri William Cox, III

19 The Clark Building 400 S. 20 th Street Birmingham, Alabama David F. Snively Deputy General Counsel Monsanto Company 800 North Lindbergh Blvd. St. Louis, Missouri Allan J. Topol Covington & Burling 1201 Pennsylvania Avenue, N.W. Washington, D.C Mark White rd Avenue North Birmingham, Alabama William J. Baxley Joe E. Dillard 2008 Third Avenue South Birmingham, Alabama Jesse S. Finlayson Richard M. Cieri Gibson, Dunn & Crutcher, L.L.P. 200 Park Avenue New York, New York Kimberly B. Glass 2125 Morris Avenue Birmingham, Alabama Ira S. Dizengoff 590 Madison Avenue New York, New York Edward Q. Ragland Assistant United States Attorney Office of the United States Attorney Northern District of Alabama

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21 FILED 2004 Nov-24 PM 05:26 U.S. DISTRICT COURT N.D. OF ALABAMA IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA UNITED STATES OF AMERICA Plaintiff, CIVIL ACTION NO. CV-02-C-0749-E PHARMACIA CORPORATION (p/k/a Monsanto Company) and SOLUTIA INC., Defendants. MOTION TO RECONSIDER UNITED STATES' MOTION TO STRIKE LETTER FROM DEFENDANTS TO COURT AND COURT'S NOVEMBER 18, 2004 ORDER I. Introduction By letter dated November 17, 2004, Defendants submitted a letter to the Court asking for intervention by the Court into a fictional dispute under the Consent Decree. In response to Defendants' letter, on November 18, 2004, the United States filed a Motion to Strike. However, prior to the United States' Motion to Strike being filed, on November 18, 2004, at 12:45 pm(cst) the Court entered an Order designating the Technical and General Special Masters for the Consent Decree to "provide assistance during this informal negotiation period." It thus appears from the timing of the Court's Order that it was issued without the Court having the benefit of considering the United States' Motion

22 to Strike. The Unite.d States respectfully submits that the Court will wish to withdraw its Order after it has the benefit of the United States' position. For the reasons set forth below, the United States respectfully requests that the Court reconsider the United States' Motion and the Court's November 18, 2004 Order. In their letter, the Defendants claim to invoke the dispute resolution provisions of the Consent Decree under the false premise that the Environmental Protection Agency ("EPA") is attempting to alter the Defendants' rights under the Consent Decree. As shown below, there is no dispute between the parties and, even if there was a dispute, the Defendants have not complied with the Dispute Resolution provisions of the Consent Decree. II. Argument A. There is no dispute under the Consent Decree In their letter, Defendants improperly claim that they are invoking the informal negotiation provisions of the dispute resolution process under the Consent Decree because settlement discussions regarding the Anniston Lead Site will alter the Defendants' rights under the Consent Decree, particularly their right to claims for contribution. However, the mere fact that EPA is involved in ongoing negotiations at the Anniston Lead Site does not in any way give rise to any dispute between EPA and the

23 Defendants under the Consent Decree for the Anniston PCB Site. 1 Therefore, Defendants' invocation of dispute resolution under the Consent Decree is improper. As indicated in Defendants' letter, EPA has been negotiating a settlement with a group of potentially responsible parties for the Anniston Lead Site. This group of potentially responsible parties includes both Solutia and Pharmacia due to releases of lead into the environment from their corporate predecessor's (Monsanto) Anniston plant. EPA's overall objective is to reach an agreement with potentially responsible parties that results in the lead contamination and other contaminants of concern in Anniston being cleaned up so as to protect public health and the environment. Until Defendants' November 17, 2004, letter was received, EPA believed that Solutia and Pharmacia were likely parties to any settlement that may ultimately be reached for the Anniston Lead Site. The United States now assumes that Defendants' letter represents either a decision by the Defendants not to participate in any settlement for the Anniston Lead Site or a thinly veiled attempt to improve their negotiating posture with EPA and the other potentially responsible parties. Clearly, the dispute ' The Anniston Lead Site includes residential properties in and around Anniston, Alabama which contain lead. Many of the properties that make up the Anniston Lead Site also contain PCBs and therefore, there is some overlap between the Anniston Lead Site and the Anniston PCB Site.

24 resolution provisions of the Consent Decree are not the appropriate mechanism for negotiating a settlement at another Superfund site. Further, contrary to Defendants' assertion, EPA is not attempting to take away Defendants' "bargained for" rights to contribution under the Consent Decree. By law, any potentially responsible parties who enter into a settlement with EPA for the Anniston Lead Site are entitled to protection from contribution actions. 2 While the Consent Decree acknowledges the Defendants' statutory right to seek contribution, it in no way prohibits EPA from fulfilling its statutory mandate to force other responsible parties to conduct additional clean up work in Anniston, Alabama. Apparently, the Defendants seem to be taking the absurd position that EPA is prohibited by the Consent Decree from negotiating clean up settlements with other potentially responsible parties. In any event, whatever concerns that the Defendants may have regarding a potential settlement for the Anniston Lead Site, those concerns are certainly not disputes under the Consent Decree approved and entered by this Court. Therefore, the Defendants attempt to invoke dispute resolution under the Consent Decree is misplaced. 3 2 See CERCLA Section 113(f)(2) and 122(h)(4). 3 In fact, the Defendants have a pending contribution action in the District Court for the Northern District of Alabama against certain alleged responsible parties (Case Number CV-03- PWG-1345-E). It is in that forum that the scope of the Defendants' contribution rights, if any.

25 Additionally, EPA has kept the Legal Special Master, Mr. Doug Jones, generally apprised of EPA's ongoing efforts related to the Anniston Lead Site, and EPA is amenable to providing additional information to Mr. Jones if requested. The United States, on November 23, 2004, informed Mr. Jones that we would be pleased to meet with him (and Mr. Dahl) to discuss EPA's objectives in cleaning up the lead contamination in Anniston in a way that it is protective of public health and the environment. B. Defendants' November 17, 2004 letter to the Court undermines the dispute resolution provisions of the Partial Consent Decree As stated above, there is no current dispute under the Partial Consent Decree between the parties. However, even if there was a dispute, the Dispute Resolution provision of the Partial Consent Decree (Section VIII.) requires the parties to attempt to resolve any disputes outside the Court, and to only seek Court involvement as a last resort. Paragraph 23 of Section VIII. states that "any dispute which arises under or with respect to this Consent Decree shall in the first instance be the subject of informal negotiations between the parties to the dispute. The period for informal negotiations shall not exceed twenty (20) days from the time the dispute arises, unless it is modified by written should be appropriately determined. 5

26 agreement of the parties to the dispute. The dispute shall be considered to have arisen when one party sends the other parties a written Notice of Dispute." Defendants never provided the United States such a written Notice of Dispute as mandated by the Consent Decree. Furthermore, paragraph 24 (a) of Section VIII. states that "in the event that the parties cannot resolve a dispute by informal negotiations under the preceding Paragraph, then the position advanced by EPA shall be considered binding unless, within twenty-eight (28) days after the conclusion of the informal negotiation period, Defendants invoke the formal dispute resolution procedures of this Section by serving on the United States a written Statement of Position on the matter in dispute, including, but not limited to, any factual data, analysis or opinion supporting that position and any supporting documentation relied upon by the Defendants. The Statement of Position shall specify the Defendants' position as to whether formal dispute resolution should proceed under Paragraph 25 or Paragraph 26." Paragraph 24 (b) then requires EPA, within twenty-eight (28) days after receipt of Defendants' Statement of Position, to serve on Defendants its Statement of Position, including, but not

27 limited to any factual data, analysis, or opinion supporting that position and all supporting documentation relied upon by EPA. In addition, EPA's Statement of Position shall include a statement as to whether formal dispute resolution should proceed. Defendants then have fourteen (14) days to submit a reply to EPA's Statement of Position. Only after the foregoing provisions have been fully exhausted and the parties have been unable to resolve the dispute, is it appropriate for the dispute to be submitted to the Court. The purpose of the Dispute Resolution provisions of the Consent Decree is to not burden the Court with disputes until the parties have made every effort to resolve the dispute on their own. That is precisely why the Consent Decree sets out a detailed mechanism for resolving disputes. Here, before notifying EPA, the Defendants have foisted their alleged dispute on the Court in direct violation of the Dispute Resolution requirements that they agreed to and the Court approved. C. This Court previously ordered that no letters shall be submitted to the Court asking for Court action. By Order dated March 19, 2004, this Court stated that "Both parties and interested non-parties shall refrain from submitting letters to this Court containing legal arguments or requests for Court action." In their letter, the "Defendants ask the Court and its General Special Master, Doug Jones, and Technical Special Master, Tom Dahl, to provide assistance during this informal 7

28 negotiation period." Arguably, the Defendants are asking for Court action, and hence, the letter violates this Court's March 19, 2004, Order. Conclusion For the reasons mentioned above, the United States respectfully requests that the Court strike Defendants' letter of November 17, 2004 and withdraw its November 18, 2004 Order. Moreover, in any event, the United States will be pleased to keep the Special Masters fully informed of matters related to the Anniston Lead Site and to provide them any information they may need. Additionally, the United States has informed Mr. Jones that it will be pleased to meet with him to explain the position of the United States, and to discuss the Anniston Lead Site and the United States' objectives in getting the lead contamination in Anniston addressed so as to provide protection of public health and the environment. Respectfully submitted, Thomas L. Sansonetti Assistant Attorney General Environment & Natural Resources Division William A. Weinischke, Senior Attorney Environmental Enforcement Section Environmental and Natural Resources Division U.S. Department of Justice P.O. Box 7611 Washington, D.C (202)

29 CERTIFICATE OF SERVICE This is to certify that a copy of the foregoing Motion to Reconsider the United States' Motion to Strike and the November 18, 2004 Order of the Court has been served upon the following counsel, by mailing the same by first class United States mail, properly addressed and postage prepaid, on this the of November, 2004: Special Master G. Douglas Jones nd Avenue, North Birmingham, Alabama Christopher H. Buckley, Jr. Gibson, Dunn & Crutcher, L.L.P Connecticut Avenue, N.W. Washington, D.C Cathleen S. Bumb Assistant General Counsel - Environmental Solutia, Inc. 575 Maryville Drive St. Louis, Missouri William Cox, III The Clark Building 400 S. 20 th Street Birmingham, Alabama David F. Snively Deputy General Counsel Monsanto Company 800 North Lindbergh Blvd. St. Louis, Missouri Allan J. Topol Covington & Burling 1201 Pennsylvania Avenue, N.W. Washington, D.C Mark White rd Avenue North

30 Birmingham, Alabama William J. Baxley Joe E. Dillard 2008 Third Avenue South Birmingham, Alabama Jesse S. Finlayson Richard M. Cieri Gibson, Dunn & Crutcher, L.L.P. 200 Park Avenue New York, New York Kimberly B. Glass 2125 Morris Avenue Birmingham, Alabama Ira S. DizengotT 590 Madison Avenue New York, New York Ed Ragland Assistant United States Attorney Office of the United States Attorney Northern District of Alabama 10

31 EXHIBIT

32 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA FILED 2004 Dec-14 PM 12:42 U.S. DISTRICT COURT N.D. OF ALABAMA UNITED STATES OF AMERICA Plaintiff, CIVIL ACTION NO. CV-02-C-0749-E v. PHARMACIA CORPORATION (p/k/a Monsanto Company) and SOLUTIA INC., Defendants. REPLY MEMORANDUM IN SUPPORT OF MOTION TO STRIKE DEFENDANTS' NOVEMBER LETTER TO THE COURT I. Introduction On November 17, 2004, the Defendants submitted a letter to the Court asking for intervention by the Court into a fictional dispute under the Consent Decree. In their letter, the Defendants claimed to invoke the dispute resolution provisions of the Consent Decree under the false premise that the Environmental Protection Agency ("EPA") is attempting to alter the Defendants' "bargained for" rights under the Consent Decree by negotiating a settlement with other potentially responsible parties (PRPs). Essentially, the Defendants' contend that the Consent Decree prohibits the United States from entering into any settlement with other potentially responsible parties (PRPs) for the purpose of cleaning up lead and PCB contamination in Anniston, Alabama. 1

33 No interpretation of the Consent Decree can reach such an absurd result. There is simply no legitimate dispute between the parties under the Consent Decree and, in fact, the Consent Decree and CERCLA expressly reject the position espoused by the Defendants. The Defendants' outright misreading of the Consent Decree does not give rise to a dispute. 1 II. Argument A. Defendants' position is contrary to the express provisions of the Consent Decree In their Response, the Defendants continue to mislead the Court by asserting that they have "bargained for" contribution rights in the Consent Decree which in turn prohibits the United States from exercising its authority to enter into settlements with other PRPs. The Defendants are simply wrong. The provisions of the Consent Decree cited by Defendants are not assurances that the Defendants, in fact, have contribution 'Contrary to the Defendants' assertion, the United States has not claimed that the Defendants failed to properly submit a notice of dispute as required by the Consent Decree. Rather, the United States argued that Defendants' letter to the Court requesting that the Court get involved in the dispute violated not only the detailed dispute resolution procedures in the Consent Decree, but also violated this Court's prior Order regarding the submission of letters to the Court. The Defendants' assertion in their Response that "the approach taken by the Defendants was intended both to inform the Court and to not raise unnecessary concerns with the community" belies the truth. In their Conclusion, the Defendants state "The purpose of the letter was to request the services of the Special Masters to facilitate resolution..." Nevertheless, the United States maintains that the foregoing is irrelevant because there is simply no dispute under the Consent Decree.

34 rights. They are merely references to the fact that their entry into the Consent Decree did not impair any contribution rights they may otherwise have. 2 The Defendants fail to make any mention of the fact that the United States reserved all of its rights under.the Consent Decree. Specifically, Section X (Covenants Not to Sue by Plaintiff), Paragraph 32, of the Consent Decree states that "Notwithstanding any other provision of this Consent Decree, the RI/FS Agreement, the NTC Removal Agreement and/or the Removal Order, the United States retains all authority and reserves all rights to take any and all response actions authorized by law." (emphasis added.) Sections 104, 122, and 106 of CERCLA provide specific authorization for the United States to enter into agreements with PRPs to conduct response actions, and no provision cited by Defendants can take away the United States' statutory rights. 3 Despite Defendants' arguments to the 2 Defendants claim that "the right to pursue otherresponsible parties is a common negotiated term in CERCLA settlements." Defendants Reply Brief, pg. 4. So common, in fact, that it is standard boilerplate in CERCLA settlements. Id. at fn. 3. They are right that it is boilerplate language. Therefore, Defendants claim that they specifically "bargained" for it is at best a mischaracterization since it is in fact model language in all CERCLA settlements such as the Consent Decree. The reason it is model language is not because it is "negotiated for" by parties, but because it reflects the provisions of CERCLA. CERCLA Section 113(f)(l) confers contribution rights upon settling parties. The Defendants did not need to bargain for them. That provision is model language in CERCLA settlements only to clarify that a settling party's entry into a CERCLA settlement does not take away its statutory rights to contribution, whatever they may be U.S.C. 9604, 9606, and 9622.

35 contrary, it is the Defendants who, through this fictional Consent Decree dispute, are attempting to curtail the United States' rights and authority under CERCLA. 4 Furthermore, by their actions, the Defendants are attempting to stop the clean up of lead contamination in Anniston. The Defendants' assertions are at odds with the express language of the Consent Decree. Defendants reliance on several provisions of the Consent Decree simply do not support: anything more than the United States' acknowledgment that the Defendants "may" seek contribution against other parties pursuant to contribution rights the Defendants "may have". Defendants first rely on Section XII of the Consent Decree (Effect of Settlement; Contribution Protection), Paragraph 38, which states that "Each of the Parties expressly reserves any and all rights (including, but not limited to, any right of contribution)... which each Party may have with respect to any matter, transaction, or occurrence relating in any way to the Site and/or the Anniston 4 The Defendants reliance on United States v. Knote 29 F.3d 1297 (8 th Cir. 1994) is misplaced. If there was a dispute under the Consent Decree, the United States would certainly comply with the dispute resolution procedures set forth in the Consent Decree. In Knote, there was a technical disagreement between the parties over the decontamination of a building. The question for the court in that case was whether the consent decree covered that dispute. Here, however, there is no underlying dispute for consideration. There is only the Defendants' misreading of the plain language of the Consent Decree and CERCLA. The United States maintains that the terms of the Consent Decree are so clear that there can be no dispute. "Notwithstanding any other provision of the Consent Decree" means exactly that.