Document o9NDeYY09xvRmoyK4NZLyRq77

COLUMBIA FALLS ALUMINUM COMPANY P-0. Bax 10 Columbia FaHs, Montana 59912 Telephone 406 892-3261 May 14, 1987 Mr. J. P. Meek Senior Attorney Legal Department Atlantic Richfield Company 515 South Flower Street Los Angeles, CA 90071 Dear Mr. Meek: 1. SUMMARY As you are well aware, the' Columbia Falls. Montana aluminum re duction facility was purchased from ARCO by the Montana Aluminum Investors Corp. (MAIC) in September 1985. By agreement, ARCO retained liabilities to conditions in existence prior to the closing date. You are familiar with the extent of asbestos at Columbia Falls and the need for asbestos removal. This memorandum provides background documentation leading up to this situation, as well as an engineer's estimate of control methodol ogy. There are a total of eight attachments. In chronological order. By our estimate, ARCO's liability for asbestos abatement at Columbia FaHs amounts to $280,000. We would be happy to discuss this matter in more detail at your earliest convenience. It would appear that a meeting at Columbia Falls would, be best, so we could show you, firsthand, the extent of the problem. 2. BACKGROUND--ARCO's ROLE The Acquisition Agreement (Attachment 1) between ARCO and MAIC is specific about liability. Section 10(a): "Seller (ARCO) will indemnify and hold Buyer (MAIC) harmless from and against . . .," Section 10(a)iii, "All damages, losses, and out-of-pocket expenses caused by or arising out of obligations or liabilities relating to the Smelter Business resulting from events or conditions in existence prior to the Closing Date." You have visited the plant and are well aware of the problem and ARCO's liability (Attachment 5). ARCO has already addressed one part of the problem--asbestos medical monitoring (Attachment 6). 1 ARCF 004064 The problem at hand is asbestos in situ. There is no question that the asbestos must be controlled (Attachment 8). The asbestos in the plant was thoroughly evaluated. The quantity of asbestos in situ was beyond what anyone had imagined. A detailed engineer's estimate was prepared and is discussed in Section 4 of this report. 3. THE NEED FOR ABATEMENT The Columbia Falls plant was constructed as follows: 1953 - 1955 1964 - 1965 1966 - 1968 Lines 1 and 2 Line 3 Lines 4 and 5 During this time frame, asbestos was widely used in construction for thermal and electrical insulation, for mechanical abrasion or friction applications, for fire resistant clothing and roofing, and water pipe applications, as well as a myriad of other uses. The danger of asbestos became known in the early 1970's and an industrial hygiene program was established at Columbia Falls (At tachment 2). Of particular interest is the change of Threshhold Limit Value (TLV) oyer the past 15 years by OSHA: July 7, 1972 July 1, 1976 August 1, 1986 August 1, 1986 5 fibers/cc 2 fibers/cc 0.2 fibers/cc 0.1 fiber/cc 8 hour avg. 8 hour avg. 8 hour avg. "Action Level" (Attachments 2 and 4) Thus, the present action level is 1/50th the TLV just 15 years ago. We have had conversations with OSHA to determine whether or not abatement is required (Attachment 8). We know the asbestos is there; we know persons who work in the area are exposed well over the TLV; and we know "feasible engineering controls" exist. Thus, CFAC and ARCO are extremely likely to become involved in a "trig gering incident" which you yourself described (Attachment 5). 4. ACTION PLAN AT COLUMBIA FALLS--CONTROL COSTS The history of the asbestos program at Columbia Falls has been previously referenced (Attachment 2). As a result of more stringent standards regarding asbestos (Attach ment 4), we undertook an extensive survey of ail known asbestoscontaining materials in the plant in June and July, 1986 (Attachment 2 ARCF 004065 3). The result showed far more asbestos material in situ than anyone at Columbia Falls expected. A thorough engineering study was undertaken to determine what could be done (Attachment 7). Estimates for the Encapsulation, Option I, were $280,330. Option II, Removal, was $2,160,005. After extensive study, including discussions with OSHA, we believe Option I to be most reasonable and cost effective. 5. CONCLUSION All of the asbestos that must now be controlled was in place when ARCO transferred the plant to MA1C. In the Acquisition Agreement, ARCO agreed to retain liabilities "in existence prior to the Closing DateJ,' Thus, J believe ARCO should remunerate MAIC for all ex penses incurred in the above-described asbestos abatement project. Sincerely, T. F. Payne Technical Manager TFP/rb Attachments (8) mcs: D. F. Ryan/N. Gilliland w/ attachments R. J. Smollack/D. Strainer " 3 ARCF 004066