BASE REALIGNMENT AND CLOSURES: THE NEW BROWNFIELDS INITIATIVE (EPA BROWNFIELDS 2000 CONFERENCE) (October 12, 2000) Michael O. Hill Michael O. Hill Senior Vice President Senior Vice President TRC Companies, Inc. TRC Companies, Inc. 202/ /

1 Recent Findings “The private sector is typically on the sidelines of BRAC property transfer, yet they are uniquely qualified to identify and create value in such property, thereby accelerating transfer.”“The private sector is typically on the sidelines of BRAC property transfer, yet they are uniquely qualified to identify and create value in such property, thereby accelerating transfer.” Source: “Issues And Alternatives For Cleanup And Property Transfer Of [BRAC] Sites,” 8/1/00 Paper By The Institute For Defense Analyses, App. G, at G-215 (8/1/00)

2 Recent Findings (cont’d) “Given the success that industry has demonstrated in accelerating property transfer... the government should consider adapting industry strategies to achieve its goals [of remediating BRAC properties.]”“Given the success that industry has demonstrated in accelerating property transfer... the government should consider adapting industry strategies to achieve its goals [of remediating BRAC properties.]” Source: “Site Remediation And Redevelopment” a 3/23/00 Paper for DoD by Lockheed Martin Corporation & The Institute For Defense Analyses, Prepared To Enable Faster Transfer Of BRAC Prooperty

3 Concept Of Exit Strategy ® TRC Assumes Complete Liability And ResponsibilityTRC Assumes Complete Liability And Responsibility –Contractual –Regulatory (e.g., as a Superfund PRP) Insurer Issues Financial Assurance And Insurance To Guarantee PerformanceInsurer Issues Financial Assurance And Insurance To Guarantee Performance Flexible: Custom Designed For Each Customer SituationFlexible: Custom Designed For Each Customer Situation

4 Applications Of Exit Strategy ® Individually-Owned SitesIndividually-Owned Sites (Discontinued Operations -- e.g., Brownfields -- as well as Ongoing Operations) Mergers, Acquisitions & DivestituresMergers, Acquisitions & Divestitures Multi-Party Superfund SitesMulti-Party Superfund Sites

5 Benefits As To Individually-Owned Sites Eliminate Risk Of Cost Uncertainties And Regulatory ChangesEliminate Risk Of Cost Uncertainties And Regulatory Changes Eliminate Need To ManageEliminate Need To Manage Possible Tax AdvantagesPossible Tax Advantages Possible SEC Reporting AdvantagesPossible SEC Reporting Advantages

6 Benefits As To M&A Sites SellerSeller –Obtains “Market” Price –No Future Involvement BuyerBuyer –Eliminates Risk Of Future Discoveries –No Dependence On Seller’s Solvency –No Resource Commitment To Cleanup BothBoth –Transaction Gets Done (“Tail” Does Not Wag “Dog”) –Independent Assessment Of Cost

7 Benefits As To Superfund Sites Eliminate/Avoid Attorney’s Fees And Other Transactions CostsEliminate/Avoid Attorney’s Fees And Other Transactions Costs Eliminate Risk Of Cost Uncertainties And Regulatory ChangesEliminate Risk Of Cost Uncertainties And Regulatory Changes Possible Tax AdvantagesPossible Tax Advantages Possible Reporting AdvantagesPossible Reporting Advantages

8 Wells Site Exit Strategy ® Oil Recycling Operation Oil Sludge and Soil & Groundwater Contamination Over 2,900 PRPs (including DoD, w/ 27%)

9 PBWO Risks Undefined Groundwater PlumeUndefined Groundwater Plume Cost Of RemedyCost Of Remedy Off-site Contamination of Drinking WellsOff-site Contamination of Drinking Wells PRP ParticipationPRP Participation

10 PBWO Result Decree Entered May 30, 2000Decree Entered May 30, 2000 TRC Assumed Full Legal Responsibility Under Consent DecreeTRC Assumed Full Legal Responsibility Under Consent Decree DoD and other PRPs (and State) Protected By AIG-Issued Financial Assurance & InsuranceDoD and other PRPs (and State) Protected By AIG-Issued Financial Assurance & Insurance

11 Major Aerospace Company 3 Sites Available For Redevelopment3 Sites Available For Redevelopment –One Leased –One Under Sales Agreement –One Sold and In Redevelopment Seller Needed To Reallocate Resources To Core BusinessSeller Needed To Reallocate Resources To Core Business Buyers Needed Faster ActionBuyers Needed Faster Action

12 Risks Defined Problems But Undefined ExtentDefined Problems But Undefined Extent Previously Approved Remedies InappropriatePreviously Approved Remedies Inappropriate Development Delayed Due To Environmental IssuesDevelopment Delayed Due To Environmental Issues

13 Result TRC Assumes Environmental and Contractual LiabilityTRC Assumes Environmental and Contractual Liability –Fixed Price Contract Environmental Risk ManagementEnvironmental Risk Management –$50MM AIG Cost Cap Insurance Financial AssuranceFinancial Assurance –AIG-Issued Bonds Secured Performance

14 Major Energy Company Purchase Of 18 Plants & 350 Ancillary Facilities ($1.4B) Buyer and Seller Could Not Agree on Cost of Environmental Cleanup

15 Risks Site Conditions Partially Defined Or UndefinedSite Conditions Partially Defined Or Undefined Lack Of Clear Regulatory StandardsLack Of Clear Regulatory Standards Off-site ContaminationOff-site Contamination –Cost of Cleanup –Third Party Property Damage Impact Of On-going OperationsImpact Of On-going Operations

16 Result TRC Assumed Environmental Liability For All SitesTRC Assumed Environmental Liability For All Sites AIG Finite Approach Provided Financial Assurance And InsuranceAIG Finite Approach Provided Financial Assurance And Insurance Exit(s) To The Exit Strategy ® At Client’s OptionExit(s) To The Exit Strategy ® At Client’s Option

17 Media Quotes “[TRC’s] Maine Experiment May Point The Way To Ending Tangle Of Litigation Around Superfund Law” (WSJ, 4/29/98)“[TRC’s] Maine Experiment May Point The Way To Ending Tangle Of Litigation Around Superfund Law” (WSJ, 4/29/98) “[S]ounds like good old American ingenuity to me.” (WSJ, quoting EPA Administrator C. Browner)“[S]ounds like good old American ingenuity to me.” (WSJ, quoting EPA Administrator C. Browner) “This is a great idea.” (WSJ, quoting Senator R. Smith, Chair Of Sen. Env. & Pub. Works Comm.)“This is a great idea.” (WSJ, quoting Senator R. Smith, Chair Of Sen. Env. & Pub. Works Comm.)

18 Media Quotes (cont’d) “[TRC’s] arrangement is ‘revolutionary’... A ‘new model’ for reducing cleanup and litigation costs” (BNA Daily Envir. Rptr., 6/8/00, quoting Maine DEP official).“[TRC’s] arrangement is ‘revolutionary’... A ‘new model’ for reducing cleanup and litigation costs” (BNA Daily Envir. Rptr., 6/8/00, quoting Maine DEP official).