Board of Directors
Douglas M. Costle
Louis Fernandez
Sandra S. Gardebring
Edwin A. Gee
Donald Kennedy
Joshua Lederberg
Charles W. Powers
William K. Reilly
Henry B. Schacht

Chairman of the Board
Russell E. Train

President
Charles W. Powers

CLEAN Sites, INc.

June 19, 1984

To: The Board of Directors
Clean Sites Inc.

From: Charles W. Powers,
President

Brand new institutions have a certain sense of unreality to
them. I have felt it when responding to an interested press
about how many sites Clean Sites has cleaned up while we
struggled to get a bank account opened so we could buy
stationery. A new board has a similar strangeness. Neither I nor
our Chairman, Russell Train, has ever met some of you. I suspect
that none of you know every other member. And for many of you,
the relatively scant information you have received will have
raised as many questions about Clean Sites, Inc. as it has
answered,

Three regular members of the new Board (Douglas Costle, Louis
Fernandez and William Reilly) and I as an ex officio member were
associated with The Conservation Foundation Steering Committee
and directly associated with the development of the concepts and
ideas which led to the formation of the new corporation. Russell
Train agreed to be Chairman of the new Board in early May and was
able to review the documents associated with the evolving
institution prior to the press conference on May 31. But each of
the other five members of the Board (Edwin Gee, Sandra
Gardebring, Donald Kennedy, Joshua Lederberg and Henry Schacht)
were first contacted about CSI in late May. The initial several
weeks have been largely consumed with the very mundane logistical
processes of installing the telephome and the word processor on
which we are typing this first CSI memo and on the other very
rudimentary aspects of creating an organization with some
communications and planning capability. But now that we are
becoming a functional unit, Russ Train and I want to move as
quickly as possible to establish effective communication and to
make CSI's a working Board in which all members participate.

One of these elements - providing a regular information flow
- is relatively easy now that we can type and copy. I am
committed to giving the Board bi-weekly reports until we are well
under way. Rapidly-developed and complete minutes of Board
meetings will be essential in keeping all members abreast of
Board activities. Those efforts begin with this memo and the
enclosed materials which provide some background on just what led
up to CSI's announcement and to the few decisions taken then for
those of you who could not attend the initial meeting.

One Washington Circle Hotel, 1 Washington Circle, N.W., Suite 915, Washington, D.C. 20037 202 — 887-6380
But the more effective way of getting underway is to get the
Board together and that is proving to be difficult. We are now
developing a "year-ahead" calendar with your assistants and still
hope to find several meeting times this summer so that by fall at
the latest all Board members will have participated in a regular
Board meeting. Despite some late problems, we are proceeding
with a meeting at 8 a.m. on the morning of June 29 (at
Rockefeller University in New York). We will probably plan a
late July meeting and almost certainly will proceed with a
meeting on August 17 (probably in Washington). Mr. Train would
like to meet once monthly during the initial months when we will
undoubtedly face a number of personnel and policy decisions which
will shape CSI's future. And we are likely to need Board
subcommittees to deal with specific problem areas.

I. BACKGROUND:

Let me begin with a few words about the May 31 press
conference and the attendant first meeting of the corporation.
Each of you has received the press package developed by the
Conservation Foundation. In Back-up A, we have included the
actual statements made by Bill Reilly, Russ Train, Lou Fernandez
Doug Costle and Bill Ruckelshaus at the press conference. In
Back-up B are included those press clippings which followed the
announcement that CF and we have been able to find to this point.
It is likely that this packet will grow and we can make an
additional mailing of the additions for those of you who are
interested. In Back-up C I have also included the resumes of the
CSI Board and of Richard Cooper, the lawyer who ably served in
helping develop the corporate documents and is serving as
Secretary to the Board. These materials gonstitute the binder
entitled Background Materials.

What may not have been clear in the initial press materials
was the fact that the new corporation, Clean Sites Inc., was
actually born just twenty minutes before it was announced. The
steps necessary to assure that the papers were filed were taken
in the State of Maryland at about 9:00 and those members of the
Board of Directors who were present at the press conference
reviewed the attached Articles of Incorporation and the By-laws.
The several steps taken at that meeting to assure that CSI would
be able to function until an initial regular Board meeting are
recorded in the minutes of that meeting and in the description of
the resolutions passed. (All of these materials are gathered
under Tab I of this binder).

I want to emphasize the by-law provision (Article 19) which
provides that the by-laws may be amended by a majority vote of
the Board of Directors at any time. That provision for by-law
amendment will undoubtedly need to be made more stringent once we
are under way. But it is essential as we try to pull together
the strands of this new institution that the by-laws be flexible
until they prove to meet our needs and until the whole Board has
a chance to feel comfortable with them. If you have any
questions about current provisions, let me know and either I or
Rich Cooper can explain at least the initial rationale.

INSTITUTIONAL DEVELOPMENT

We are beginning to move ahead with the various logistical
steps that will enable us to achieve our mission. We have
received initial financial resources, they are in a bank account,
we are in temporary quarters and rapidly moving toward securing
more permanent ones, we are beginning to put together a plan of
action and to get some concept of how to proceed to staff up to
turn that plan into action. To support those efforts, we are
putting together materials on benefit plans, on insurance, on
accounting procedures, etc. As important, we are proceeding with
relationships at EPA (both headquarters and at the regional
level) and with the relevant industries, Each of these topics
has a separate tab in the book.

In the next several pages, I want to walk through each of
these areas and describe what I think is happening.

II. Resource Development: Initially, CSI is to be funded by
contributions from industry and from foundations. The strategy
has been to show a strong chemical industry commitment which is
then extended to other industries that generate hazardous waste
and then to approach foundations to request support for a very
specific piece of CSI activity, probably the Technical Review
function where independence of function should probably be
matched by some "independent" funding. If EPA ever directly funds
any CSI administrative costs, something that the Steering
Committee had various views about, then they would probably be
used in this same Technical Review area. (Incidentally, ina
Steering Committee discussion with Bill Ruckelshaus in March,
Ruckelshaus said that EPA would be receptive to proposals that
EPA fund some aspects of CSI administrative work once it was up
and was proving itself.) Of course, it is likely that as CSI
develops, companies who utilize its services will contribute to
the operation.

For now, the chemical industry is moving quickly to support
half of CSI's costs for the first three years, The materials
found under Tab II explain how this process works. The key
documents here are the commitment forms on which CMA companies
commit on the basis of chemical and chemical product sales. The
formula used assumed full support from the chemical industry and
was calculated to yield $2.5 million in year one, $3.5 million in
year two and $5 million in year three. These were for CSI
operational costs only. You will find a sheet in this section
which shows that as of June 11 we had commitment letters assuring
CSI first year support of nearly $.8 million (and additional
commitments from companies who committed before they had
calculated their formula contributions which should take us to
about $1.3 million). I understand that these commitment forms are
still coming in and will have an update for the Board at the
meeting.

The second step, support from other industries - or from
non-chemical operations of companies who have a chemical industry
component - will probably be more complicated. As Lou Fernandez
will explain, the three industrial members of the Steering
Committee (Lou Fernandez, Bob Forney and Ed Holmer) have
organized an effort to work with other industries to follow-up
initial meetings which CMA organized to explain CSI to other
industry associations.

The approach to foundations needs early work although we have
some interesting leads. For my part, I think a compelling case
can be made that several foundations should support the early
development of a technical review function that eventually
Warrants 50% funding from public funds. This is obviously a
matter to which the Board will want to give early attention since
we will want to pursue a consistent strategy in these next months
and all CSI supporters will be intensely interested in the other
kinds of funding we intend to pursue.

III. Working Group Organization and Budget Suggestions: When it
became clear that the Steering Committee was going to recommend
the development of an institution like CSI, the Working Group I
co~chaired with Eugene McBrayer developed an initial plan for the
Organization and budget of such an entity. I have included this
document in Tab III because it will give you some picture of how
the Steering Committee conceived the initial size and shape of
the organization. It was this analysis which gave rise to the
CMA three-year commitment letter and is providing me a general
idea as I search for space. It, combined with the description in
the Committee report and in the by-laws, gave rise to some of the
job descriptions which are discussed below under Staffing and
included in Tab VI. I assume we will review this legacy next week
and will want to get the views of those Board members who cannot
attend as I assume that the Board can use this document as a good
place to begin to formulate its own views.

IV. Relationship to EPA and Others: We should review the various
constituencies whose views CSI will need to be consider as we
operate. Surely one crucial constituency is EPA. The reports I
get are that EPA is - at all relevant levels ~- very happy about
the Board and the plans for CSI. We will get complete
co-operation and I sense already an important respect for what we
will be doing and sensitivity to how important the EPA-CSI
relationship will be in our mutual goals. This is in part the
legacy of the working relationship that Gene McBrayer and I had
built with the senior levels in Lee Thomas' shop. But I think
that the quality of the Board has dramatically increased this
willingness to make CSI work. I have just begun to make contact
with the regional EPA officials. (I was able to link a trip to
the Coast to a very good meeting with Harry Seraydarian in the
Region IX office last week. EPA headquaters is helping us with
the Regions who, in turn will be crucial to identifying the sites
we choose. Similarly, Gene Lucero helped introduce me and CSI to
the Superfund task force of the Association of State and
Territorial Solid Waste Management Officials (ATSWMO) this week.
It was an excellent way to establish a national linkage (they are
setting up formal liaison) and to meet key state people from New
York, Minnesota, Oklahoma, Illinois and Ohio. If we can forge
good relationships from D.C. back through the regions and the
states and with the local communities - and then come the other
way as well, we may have an opportunity to open up some
bottlenecks.

Because the relationship of EPA activity to CSI's is so
crucial, I have included under Tab IV two EPA documents. The
first was a work piece written by Eugene Lucero for an early
Working Group Seminar (November) during the period when the
central issue was how to speed-up voluntary agreements. It
provides a very important perspective on the Agency's thinking -
and a creative set of suggestions for governmental action which
gave rise, then, to a set of corresponding thoughts for private
action that finally emerged as CSI. The Agency' Ss most elias
official thinking about CSI is contained in a letter to
Congressman Florio sent on the day of CSI's announcement that was
a response to the Congressman's request for clarification about
the role of CSI and EPA's plans in relationship to it.

Elsewhere, things are very quiet. There have been many
gestures recently to build back a relationship with the full
environmental community. My sense is that NWF is working hard to
do so and the Chairman may have some additional reactions.

The reaction to the announcement within the chemical industry
is something we need to hear from Lou Fernandez, but it was
apparently as positive as we hoped it would be.

We hear good reactions from the hill. The one office whose
relationship to CSI is ambiguous is Jim Florio's, After the
House has finished its work on Superfund we need to work further
on that relationship. It may well be that the Board will have
some ideas on this. And my reading of the press clippings is
that the media is going to see what happens but is generally
hopeful.

All in all, my sense is that we have all the room we need to
prove ourselves. And the first place this combination of hope,
trust or forbearance begins to be acted out is in the selection
of sites. I discuss this below.

V. Office Site Selection: It appears that we have begun to look
for space in Washington at a particularly good time. There is a
glut on the market. But the process of looking for space forces
a lot of issues. What will CSI look like in 12 months, in 36
months, and in five years? Where should it be? Should it all be
concentrated or will we eventually want to regionalize the
effort? How much of the coalescing work will actually be done
right beside the site - and will coalescers need to have any
relationship at all with headquarters office? Is there any other
place besides Washington? If not, should we actually set up
outside Washington?

One thing has become clear in these first three weeks. A
hotel suite will function as the CSI home for about a month. At
the May 31 meeting, the Board authorized us to move ahead and I
have kept the Chairman up to date while moving fairly decisively
to both acquire a permanent place (it is crucial that we
extablish an address) while trying to preserve later options. We
assumed that we needed space for between 35-45 people (hopefully
with expansion options). We assumed proximity to airports and
EPA were central, but that being in the midst of the D. C. with
its focus on legislation, etc. was probably not conducive to some
of the coalesing activities likely to take place in the offices.
Costs there are high as well. We assumed that we needed good
temporary lodging access and good local transportation access as
well as a good locale for people who would be uprooting families
to join CSI for several years. We assumed that we wanted good
but not plush space and preferably space that we could design
ourselves, We assumed a need for additional conference space
that we should not try to include within our own space but the
security for which would be very important.

We think we have found the right place. The TransPatomac
development in Alexandria is four minutes from National Airport
and thirty minutes to Dulles, on the river, right next to a coal
pile for PEPCO's generator, one block from both a Ramada and the
Old Colony Inn, near communities with various types of housing
and in a town with a good and rapidly improving school system.
We would be ten minutes by car and twenty minutes by Metro from
EPA, could have a full floor (10,000 sq. ft. of usable) on the
4th floor with the likely option for additional space in the
masebuilding. The space would be done to our specifications by
October and we can have space by July 5 on the first floor.
There will be another - more plush - office development going in
a block away within the year which will dramatically expand the
contiguous retail options, but for now there are restaurants and
a travel agency and we would be four minutes by shuttle bus from
Old Town, Alexandria. We would pay $19.50 per sq. ft and are
working hard to get several months free rent. There is an
extraordinary sense of both close access to and distance from
D.C.

I have included information on this site and on one other
that looks like a possibility. (It's much further away - Silver
Spring ~- lacks quick access to airports, doesn't have quite the
right atmosphere, wouldn't be ready until August and is only 5%
cheaper). We will be moving ahead rapidly on the Alexandria site
unless someone on the Board sees a problem I haven't discovered.
Let me know as soon as possible - before the Board meeting - if
you have reservations.

VI. Staffing and Recruitment: At the moment, CSI's staff consists
of a single full-time employee (the President), Yvonne Lewis, a
manager on a leave of absence from The Conservation Foundation
for three months to help us get the office organized and to
manage some external relations here at the start, and Genny
Izurieta, a temporary clerical and accounting person. How do we
get from here to there? The Board gave specific authorization
to move ahead to start recruiting and to hire non-officer people.

The task is to get the personnel on Board to begin to operate
while making the deliberate choices and experiencing the delays
that are inherent in bringing a senior team on Board. My plan is
as follows: 1) to get a largely junior group of people (people
who will end up in the second or third tier of the three
functions) hired and on Board immediately and working on
planning, analyzing, securing information, building working level
relationships at EPA, in the companies, etc. A sample of such a
group is included in Tab VI. I have hired Margaret Glover. I
have interviewed both Lauren Ricklin and Richard Stanford. Rick,
who is thought to be the most knowledgeable technical person on
Superfund, and is developing some extraodinary approaches to data
base development that can be immediately applied to our work,
will join us from July until October. If we are lucky enough to
have NASA turn down a proposal from Planning Resources Corp.,
then Rick, who is promised as its project director, will be free
to stay with us. Additionally, there are two people from
industry - Gerry Ungerleider, a project planner from Exxon and
Karen Lee Aldridge from DuPont - whose resumes I should have by
next week. This is the sort of team I have in mind; 2)
simultaneuously, I want to identify several senior people to
begin to work with this group in its general task - but not to
make specific commitments for specific senior jobs until; 3) I
can come the Board with a slate of officers who can begin to
build the functions, in accordance with the general plan that is
evolving, at approximately the same time. It will be crucial
that the three functions be built at about the same time so that
the patterns of differentiation and co-operation are worked out
among functions of nearly equal strength.

I have several people in mind for the 2) category. These
will be people who will be willing to work "without portfolio" on
the promise that there will be a long-term major opportunity and
that there will be a chance to be in on the ground floor as we
develop the plans and first implementation steps. One such person
may be Leo Weaver, an executive vice-president at Calgon with
extensive experience in water quality management and with waste
site control technology who Merck may be willing to "loan" to CSI
for two years.

There are a number of possible senior people who have
already come to my attention or about whom I know enough to want
to know more. Tom Epply at FMC who ably led his own company
through a settlement process with the Minnesota Pollution Control
Authority and with EPA on the #1 NPL Site; Ben Dysart, an
environmental engineering professor from Clemson who is on the
EPA Science Advisory Board and is president of NWF; Morton Corn,
a professor of public health with engineering expertise who was
head of NIOSH, is a member of the EPA Science Advisory Board and
has done some excellent early work on waste site epidemiology;
and Peter Daley, a man with a doctorate in toxicology who as the
head of DOD's environmental program has turned DOD's waste site
Management effort around. But it is too early yet. I want to
make sure that we have seen the full complement of options among
industry people and that we have reviewed the hundreds of resumes
that have flowed in - directly to CSI or through the offices of
Board or Steering Committee members ~ in recent weeks. I may
have a better picture of senior options by next week, but my
current preference is to wait until at least the late July
meeting of the Board when I could propose a full slate.

Obviously we could be forced away from this program by the
emergence of a superior senior candidate who needed an immediate
answer about a specific job. In that case I would come the Board
immediately.

VII. Employee Benefit Planning: We will need a benefits plan
before we can actually get far in hiring a staff. I asked
Richard Eskin, an employee benefits expert recommended to us by
several people, to help us think through this process and after I
met with him several times to develop an approach, he prepared
the document which appears under Tab VII. The Board may want to
move ahead to authorize this program after it chooses among the
options and/or requests some modifications.

VIII. CSI Site Selection: What sites will CSI work on? Will we
always start by coalescing multiple party sites? How do we meet
the Agency's concern that we not divert it from its plans?

Some of the answers to these questions have been solidified
in recent weeks. Originally, CSI planned to work only on sites
not on the National Priorities List or not on the list of sites
scheduled for remedial action in a given year. The whole logic
of that approach has been turned upside down. It now seems clear
that we should start with sites that are on the Agency's Remedial
Accomplishment Plan or which are about to be put on it. That
way, when the Agency expends time in working with us on the
initial sites, they will be moving ahead on their plan at the
Same time ~ and in that process CSI will be proving that it has
the technical competence and knowledge to assure the Agency that
any site it recommends for EPA~DOJ oversight is one which can be
handled with more rapid oversight while preserving EPA's
authority.

In Tab VIII, I have included a chracterization of the NPL
sites, have included the Agency's Remedial Accomplishments Plan
for this year, and have also added a copy of the report on
possible sites done for the CF working group last fall. At that
time, we were not planning to do RAP sites and we were not
planning an insitutuion but only a demonstration project.
Nevertheless, I think the memo is instructive.

But where do we go from here on Site Selection? In the
letter to sponsors that I included in Tab, II, I asked each of the
companies to let us know of sites in which they were involved or
of which they knew that are candidates for CSI coalesing
activity. Similarly, as indicated in Section IV, we have begun
to work closely with EPA and are developing relationships with
the EPA regions and with the states to see which sites they
identify. A matrix of these sites is being developed for the
computer. Finally, some sites will be suggested by local groups
or by municipal governments. We have several suggestions
already.

IX. General and Future Plans: There is a consensus among those I
talk to that Arthur Andersen and Coopers are the best of the big
eight companies in providing services to non-profits in D.c. I
am going to ask Burt Edwards, a recommended partner, to develop
an accounting manual. The Board will want to determine who
should become the company's auditors and I will plan to have a
recommendation by next Friday. At the moment, it would look like
Arthur Andersen.
I look forward to seeing those of you who can attend at the
meeting on Friday and to hearing from any of you at any time.
This is an extraordinary venture. I get more excited about its
prospects the further into it I get and know that CSI has a Board
capable of making a very substantial difference in helping the
nation resolve this major problem.

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