1016-00006 · Dunmore Energy Holdings · Litigation Preparation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

PREPARED IN ANTICIPATION OF LITIGATION — DO NOT DISTRIBUTE

This memorandum is protected by the attorney work-product doctrine under Federal Rule of Civil Procedure 26(b)(3) and Texas Rule of Civil Procedure 192.5. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel at Calderwood & Harkness LLP, and has been prepared in anticipation of litigation. Any voluntary disclosure of this memorandum to third parties outside the scope of the attorney-client relationship may result in a waiver of work-product protection. This document should not be copied, distributed, or disclosed to any person not identified in the distribution list below without the express written authorization of the Responsible Partner.

MEMORANDUM

TO: Sandra Tung, Responsible Partner; Cynthia Ho, Lead Associate

FROM: Devon Archer, Working Associate

DATE: July 3, 2025

RE: Witness Interview Memorandum — Craig Pemberton, Former Senior Operations Manager, Dunmore Terminal Services, Inc.

MATTER: Dunmore Energy Holdings Ltd. — Voluntary Remediation & Cost-Recovery, Dunmore Wharton Terminal Site

MATTER NO.: 1016-00006

CLIENT: Dunmore Energy Holdings Ltd.

I. Purpose and Summary of Interview

This memorandum documents the substance of an in-person witness interview conducted by Devon Archer on July 2, 2025, at the offices of Calderwood & Harkness LLP, located at 1200 McKinney Street, Suite 4100, Houston, Texas 77010. The interview was conducted in a private conference room, and no other individuals were present during the interview. No audio or video recording of the interview was made; this memorandum was prepared from contemporaneous handwritten notes taken by Devon Archer during the interview and from Devon Archer's recollections immediately following the conclusion of the interview.

The witness interviewed was Craig Pemberton, the former Senior Operations Manager of Dunmore Terminal Services, Inc. ("DTS"), a wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH" or the "Client"). Mr. Pemberton is now retired from full-time petroleum terminal operations and resides in Katy, Texas. His current and historical contact information is on file with Devon Archer.

The interview commenced at approximately 9:00 a.m. Central Daylight Time and concluded at approximately 12:15 p.m. Central Daylight Time, for a total duration of approximately three hours and fifteen minutes. A brief comfort break of approximately ten minutes was taken at approximately 10:30 a.m.

The purpose of the interview was to gather firsthand factual testimony from Mr. Pemberton regarding the following subjects, in anticipation of potential cost-recovery litigation against Rowan Creek Fuel Distributors, Inc. ("RCFD"):

(a) RCFD's operations at the southern tank farm of the Dunmore Wharton Terminal site, located at 14200 FM 1301, Wharton, Wharton County, Texas 77488 (the "Site"), during the period of the 1991 Joint Operating Agreement between DTS and RCFD (the "JOA");

(b) the circumstances surrounding documented releases of petroleum products from RCFD-operated tanks at the southern tank farm, including the timing, cause, volume, and response associated with each such release;

(c) RCFD's maintenance and reporting practices with respect to tanks, secondary containment, spill prevention, and environmental regulatory compliance during the period of RCFD's operations at the Site; and

(d) any documentary evidence within DTS's or DEH's archived records that would corroborate Mr. Pemberton's testimony and support DEH's cost-recovery claims.

This interview was conducted in anticipation of potential cost-recovery litigation against RCFD under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a), and Section 361.344 of the Texas Health and Safety Code. The legal theories and strategies underlying this investigation, including the allocation of remediation costs among potentially responsible parties, are discussed in separate privileged memoranda and are not fully set forth herein.

Summary Conclusion: Mr. Pemberton's testimony strongly supports DEH's position that RCFD bears significant responsibility for the contamination documented in the southern tank farm area of the Site and that RCFD failed to fulfill its obligations under the JOA with respect to tank maintenance, spill reporting, and environmental compliance. Mr. Pemberton's account is detailed, internally consistent, and corroborated by the known release history documented in TCEQ incident records and the findings of Pinehill Environmental Consulting LLC's Phase II Environmental Site Assessment dated April 2025. Mr. Pemberton's testimony is particularly damaging to RCFD on the issues of delayed release reporting and systematic resistance to industry-standard tank inspection practices, both of which contributed to the scope and severity of contamination at the Site.

II. Witness Background and Employment History

Full Name: Craig Pemberton

Current Residence: Katy, Texas. Mr. Pemberton's specific residential address has been withheld from this memorandum for privacy purposes. His full contact information, including home address, cellular telephone number, and personal email address, is on file with Devon Archer at Calderwood & Harkness LLP.

Employment with DTS: Mr. Pemberton was employed by Dunmore Terminal Services, Inc. from 1988 to 2015, a period of approximately twenty-seven years. During this tenure, Mr. Pemberton held progressively responsible positions within DTS's terminal operations organization, as follows:

• 1988–1993: Operations Technician. Mr. Pemberton began his career at DTS as an entry-level Operations Technician at the Dunmore Wharton Terminal. In this capacity, he performed routine tank gauging, product transfer operations, valve maintenance, and general equipment monitoring. He reported to the on-shift Shift Supervisor.

• 1993–1999: Shift Supervisor. Mr. Pemberton was promoted to Shift Supervisor in 1993. In this role, he supervised a crew of three to five Operations Technicians during assigned shifts, managed product receipt and delivery scheduling, and was responsible for immediate spill response and incident reporting during his shifts. He reported to the Operations Superintendent.

• 1999–2008: Operations Superintendent. Mr. Pemberton was promoted to Operations Superintendent in 1999. In this capacity, he had supervisory responsibility over all shift operations at the Dunmore Wharton Terminal, including personnel management, scheduling, maintenance coordination, and regulatory compliance oversight. He reported to the Terminal Manager (a position that was later retitled Vice President of Operations).

• 2008–2015: Senior Operations Manager. Mr. Pemberton was promoted to Senior Operations Manager in 2008, a role he held until DTS ceased operations in 2015. As Senior Operations Manager, Mr. Pemberton had overall responsibility for day-to-day terminal operations at the Dunmore Wharton Terminal. His responsibilities included oversight of the northern tank farm (Tanks N-1 through N-12, with a total shell capacity of approximately 420,000 barrels, operated directly by DTS) and coordination with RCFD regarding the southern tank farm (Tanks S-1 through S-12, with a total shell capacity of approximately 315,000 barrels, operated by RCFD under the JOA from 1991 to 2010). He reported directly to the DTS Terminal Manager and, subsequently, the Vice President of Operations.

Post-DTS Employment: Mr. Pemberton retired from full-time petroleum terminal operations upon DTS's cessation of operations in 2015. He is currently employed on a part-time basis as a safety consultant for an unrelated industrial contractor in the Houston metropolitan area. Mr. Pemberton's current consulting work does not involve any of the parties to the potential litigation and does not relate to the Dunmore Wharton Terminal or the petroleum terminal industry in the Wharton County area.

Reporting Structure: Throughout the majority of his tenure at DTS, Mr. Pemberton reported directly to the DTS Terminal Manager, a position that was held by several individuals over the years and was later retitled Vice President of Operations. Mr. Pemberton did not identify the specific names of all individuals who held this position during his employment but indicated that he could provide those names if given access to DTS's organizational records.

Presence at Key Events: Mr. Pemberton confirmed that he was physically present at the Site during all four documented RCFD-related releases (the 1996 Tank S-4 release, the 2001 Tank S-7 release, the 2008 Tank S-11 release, and the general pattern of chronic spills described in Section V.D below) and the two DTS-attributable releases (the 2003 Tank N-3 release and the 2014 loading rack release). His direct involvement in or observation of these events is described in detail in Sections V and VI of this memorandum.

Financial Independence: Mr. Pemberton stated affirmatively that he has no ongoing financial relationship with DEH, DTS, or any successor entity of either. He is not receiving any compensation for this interview or for his cooperation with Calderwood & Harkness LLP's investigation, beyond reimbursement of reasonable travel expenses incurred in connection with his travel from Katy to Houston for the interview. Mr. Pemberton has no equity interest, pension, deferred compensation, or other financial stake in DEH or any affiliated entity.

III. Overview of RCFD Joint Operating Agreement and Southern Tank Farm Operations

A. Execution of the JOA (1991)

Mr. Pemberton recalled that the Joint Operating Agreement between DTS and Rowan Creek Fuel Distributors, Inc. was executed in 1991. At the time of the JOA's execution, Mr. Pemberton was employed as an Operations Technician and was therefore not involved in the negotiation or drafting of the agreement. However, he became familiar with the terms and operational implications of the JOA through his subsequent roles and through direct observation of RCFD's operations over the following nineteen years.

Under the JOA, RCFD was granted operational control of the southern tank farm at the Dunmore Wharton Terminal — specifically, Tanks S-1 through S-12, which were situated on approximately eighteen acres of the total 48.7-acre Site. The southern tank farm was physically separated from the northern tank farm by an internal access road and a series of interconnecting pipelines, but both tank farms shared certain common infrastructure, including the truck loading rack, the pipeline metering station, and the Site's stormwater management system.

Mr. Pemberton confirmed that RCFD's president at the time of the JOA execution was Malcolm Griggs. Mr. Pemberton further confirmed, based on his own knowledge and industry contacts, that Mr. Griggs remains RCFD's president to this day. RCFD is understood to be headquartered in Austin, Texas.

Under the terms of the JOA, as Mr. Pemberton understood them, RCFD assumed the following responsibilities with respect to the southern tank farm:

(a) Day-to-day operation of Tanks S-1 through S-12, including product receipt, storage, blending, and delivery;

(b) Routine maintenance and inspection of the southern tanks and all associated equipment, including piping, valves, pumps, manifolds, and secondary containment structures;

(c) Compliance with all applicable federal, state, and local environmental and safety regulations, including but not limited to the Clean Water Act, the Resource Conservation and Recovery Act, applicable TCEQ regulations, and OSHA standards;

(d) Prompt reporting of any releases, spills, or other environmental incidents to DTS and to all relevant regulatory agencies, including the Texas Commission on Environmental Quality ("TCEQ" or its predecessor agency, the Texas Natural Resource Conservation Commission); and

(e) Maintenance of adequate insurance coverage for its operations at the southern tank farm.

DTS, for its part, retained overall site management responsibility and ownership of the underlying real property and permanent infrastructure, including the tank shells, foundations, containment berms, and pipeline interconnections. However, operational control of the southern tank farm — including the personnel, equipment, and day-to-day decision-making authority — rested with RCFD during the term of the JOA.

Mr. Pemberton emphasized that the division of operational responsibility was understood clearly by both DTS and RCFD personnel on the ground, and that RCFD operated the southern tank farm with its own employees, its own supervisory structure, and its own equipment. DTS personnel did not routinely enter the southern tank farm operating area during normal operations, although DTS management retained the right to inspect the southern tank farm and did so on an intermittent basis, as described further below.

B. RCFD's Staffing and Operations

Mr. Pemberton stated that RCFD maintained a crew of approximately eight to twelve workers at the southern tank farm during peak operations. The size of RCFD's on-site workforce varied over the life of the JOA, with staffing levels generally declining after approximately 2005 as throughput volumes decreased.

RCFD's operations at the southern tank farm primarily involved the receipt, storage, and distribution of refined petroleum products, specifically diesel fuel and various grades of gasoline. Mr. Pemberton did not recall RCFD handling crude oil or other unrefined products at the Site. Product was received both by pipeline (via interconnection with the Colonial Pipeline system) and by truck, and was delivered to customers primarily by truck from the shared loading rack facility.

Mr. Pemberton observed that RCFD's operational practices differed from DTS's standards in several material respects, which are detailed in Section IV of this memorandum. In general terms, Mr. Pemberton characterized RCFD's approach to maintenance and environmental compliance as less rigorous than DTS's approach, and he noted that this disparity was a source of ongoing concern and friction between DTS and RCFD operations personnel throughout the duration of the JOA.

RCFD maintained its own on-site supervisor who served as the primary point of contact between RCFD's field operations and DTS's site management. Mr. Pemberton recalled the name "Ray Cahill" as a long-time RCFD site supervisor who was present at the Site from approximately 1993 through 2008. Mr. Pemberton interacted with Mr. Cahill regularly throughout this period and described Mr. Cahill as the individual who was most frequently responsible for communicating — or failing to communicate — information about RCFD's operations and incidents to DTS. Mr. Pemberton did not recall the name of Mr. Cahill's replacement after 2008, stating only that RCFD's on-site presence was significantly reduced in the final two years of the JOA.

C. Termination of JOA (2010)

The JOA was terminated in 2010, and RCFD ceased all operations at the Site at that time. Mr. Pemberton was the Senior Operations Manager during the termination process and was directly involved in coordinating the transition of the southern tank farm from RCFD's operational control back to DTS.

Mr. Pemberton stated that the termination of the JOA was prompted by a combination of factors, including: (a) ongoing operational disagreements between DTS and RCFD regarding maintenance standards, inspection practices, and environmental compliance at the southern tank farm; (b) declining throughput volumes at the southern tank farm, which had reduced RCFD's commercial interest in maintaining operations at the Site; and (c) a general deterioration of the business relationship between DTS and RCFD management. Mr. Pemberton did not recall the specific contractual mechanism by which the JOA was terminated (e.g., whether it was terminated for cause or upon expiration of its term) but stated that the termination was not amicable and that there was significant disagreement between DTS and RCFD regarding the condition of the southern tank farm at the time of RCFD's departure.

After RCFD's departure in 2010, DTS assumed responsibility for the dormant southern tank farm tanks. DTS drained the remaining product from the S-farm tanks and took them out of active service. However, the tanks were not formally decommissioned, closed, or removed before DTS itself ceased all operations at the Site in 2015. Mr. Pemberton attributed this to budgetary constraints faced by DTS in its final years of operation, as well as uncertainty regarding the future disposition of the Site.

IV. Tank Condition and Maintenance Practices Under RCFD Control

A. General Observations on RCFD Maintenance Standards

Mr. Pemberton described RCFD's maintenance of the southern tank farm over the period of the JOA (1991–2010) as "consistently below the standard we maintained in the northern farm." Mr. Pemberton stated this assessment plainly and without hedging, and he provided specific examples to support his characterization. He noted that the disparity in maintenance standards between the two tank farms was observable to anyone who walked both areas and that DTS personnel frequently commented on the difference.

The specific maintenance deficiencies observed by Mr. Pemberton during RCFD's period of operational control included the following:

Secondary Containment. RCFD's earthen berms around the southern tanks were frequently in a state of disrepair. Mr. Pemberton personally observed erosion, rodent burrowing, and breaches in the bermed containment areas around Tanks S-4, S-7, S-9, and S-11 on multiple occasions over the years. The containment berms around these tanks were earthen structures designed to contain the full volume of the largest tank within each containment area in the event of a catastrophic release, consistent with applicable SPCC requirements. However, Mr. Pemberton stated that RCFD did not perform regular maintenance on the berms, resulting in deterioration that compromised their containment integrity. He recalled specific instances in which rainwater had pooled within the containment areas because stormwater drain valves had been left open or were inoperable, and instances in which berm walls had slumped to the point where they would not have contained a significant release. Mr. Pemberton noted that these conditions were documented by DTS personnel on at least two occasions (discussed further in Section IX below regarding photographs taken in approximately 2004 and 2007).

Tank Bottom Inspections. DTS recommended that all tanks at the Site undergo internal inspections in accordance with API Standard 653 ("Tank Inspection, Repair, Alteration, and Reconstruction") on a ten-year cycle. This recommendation was consistent with industry best practices for aboveground storage tanks in petroleum service and was the standard that DTS applied to its own tanks in the northern tank farm. RCFD routinely deferred or declined tank bottom inspections for the southern tanks, citing cost concerns. Mr. Pemberton stated that, to his knowledge, RCFD did not perform a single API 653-compliant internal inspection on any of the twelve southern tank farm tanks during the entire nineteen-year period of RCFD's operation under the JOA. Mr. Pemberton acknowledged that he could not state with absolute certainty that no such inspection ever occurred, as he did not have access to all of RCFD's internal maintenance records, but he stated that he was never informed of any such inspection, and that DTS's repeated requests for RCFD to conduct such inspections were consistently rebuffed.

Corrosion Monitoring. Mr. Pemberton noted that RCFD did not, to his knowledge, implement cathodic protection systems or conduct regular ultrasonic thickness testing on the southern tanks during the period of RCFD's operation. Cathodic protection is a widely used corrosion-prevention technique for aboveground storage tank bottoms, and ultrasonic thickness testing is a standard non-destructive method for assessing the remaining thickness of tank bottom plates and shell plates. The absence of both corrosion-prevention and corrosion-monitoring measures on the southern tanks is directly relevant to the tank bottom corrosion failures that caused the 1996 Tank S-4 release and the 2008 Tank S-11 release, as discussed in Section V below.

Overfill Prevention. Mr. Pemberton recalled at least two near-miss overfill incidents at southern tank farm tanks, occurring in approximately 1998 and 2005, that were attributable to RCFD's failure to maintain or calibrate high-level alarms on the tanks. In each instance, product levels in a southern tank rose above safe operating limits before being detected by RCFD personnel. Mr. Pemberton stated that neither near-miss resulted in a release of product outside the tank, but that both incidents were indicative of RCFD's inadequate attention to critical safety and environmental protection equipment. He contrasted this with DTS's practice in the northern tank farm of testing and calibrating high-level alarms on a quarterly basis.

B. RCFD Personnel's Resistance to DTS-Recommended Inspections

Mr. Pemberton stated that, beginning in approximately 1997, DTS management — including Mr. Pemberton himself after his promotion to Operations Superintendent in 1999 — repeatedly recommended that RCFD conduct internal tank inspections per API Standard 653 on the southern tank farm tanks. These recommendations were made both informally, during routine operational coordination meetings between DTS and RCFD site personnel, and formally, through written correspondence from DTS management to RCFD's corporate offices in Austin.

RCFD's site supervisor, Ray Cahill, and RCFD's corporate management, including President Malcolm Griggs, pushed back against these recommendations on multiple occasions. Mr. Pemberton stated that RCFD's response to DTS's inspection recommendations was consistently dismissive. RCFD took the position that the southern tanks were performing adequately, that internal inspections would be unnecessarily costly and disruptive to operations, and that RCFD's own maintenance practices were sufficient to ensure tank integrity.

Mr. Pemberton recalled a specific meeting that occurred in approximately 2002 or 2003 at the Site — he could not recall the precise date but believed it was within that two-year window. At this meeting, Mr. Pemberton, who was then the Operations Superintendent, presented DTS's concerns about the integrity of the southern tank farm tanks to Ray Cahill and an RCFD vice president whose name Mr. Pemberton recalled as "Doug Falconer." Mr. Pemberton stated that he presented data on the age of the tanks, the absence of internal inspections, and the history of the 1996 Tank S-4 release as evidence of the need for a systematic inspection program. RCFD declined to schedule inspections, with Mr. Falconer stating that the inspections were "unnecessary and cost-prohibitive." Mr. Pemberton recalled being frustrated by this response and escalating the matter to DTS's Terminal Manager, who directed that DTS's position be memorialized in writing to RCFD.

Mr. Pemberton stated that DTS memorialized at least some of its inspection recommendations and maintenance concerns in written correspondence sent to RCFD's corporate offices. He believes that copies of this correspondence may exist in DTS's archived files, which are now in the possession of DEH. The specific dates and content of this correspondence are discussed further in Section IX of this memorandum.

In summarizing RCFD's approach to tank maintenance, Mr. Pemberton characterized RCFD's philosophy as "run it until it breaks." He stated that this was not an exaggeration or a characterization made with the benefit of hindsight, but rather a description that he and other DTS personnel used contemporaneously to describe RCFD's maintenance approach. Mr. Pemberton stated that the disparity between RCFD's and DTS's maintenance philosophies was a persistent source of friction between the two operations teams throughout the duration of the JOA and was one of the factors that ultimately contributed to the termination of the agreement in 2010.

V. Documented Releases — RCFD-Operated Tanks

A. 1996 Release — Tank S-4 (Approximately 8,000 Gallons Diesel)

Mr. Pemberton recalled the 1996 release from Tank S-4 as the first major release from the southern tank farm under RCFD's operations. Mr. Pemberton was a Shift Supervisor at the time and was on duty or on site when the release was discovered.

The release involved approximately 8,000 gallons of diesel fuel and was attributed to a corroded tank bottom plate on Tank S-4. The corrosion had progressed to the point of penetrating the tank bottom, allowing product to leak from the tank into the underlying soil within the secondary containment area. Mr. Pemberton stated that the specific mechanism of failure — bottom plate corrosion — was consistent with the lack of corrosion monitoring and the absence of API 653-compliant inspections that characterized RCFD's maintenance program, as discussed in Section IV above.

RCFD reported the 1996 release to TCEQ and performed a partial cleanup of the affected area. However, Mr. Pemberton stated that the cleanup was "superficial" in nature. Specifically, RCFD excavated visibly contaminated soil in the immediate area of the tank, but did not perform any subsurface investigation — such as soil borings or monitoring well installation — to assess the full lateral or vertical extent of the release. Mr. Pemberton stated that it was his professional assessment, based on his experience in petroleum terminal operations, that the volume of product released (approximately 8,000 gallons) could not have been fully recovered through the limited surface excavation that RCFD performed.

Mr. Pemberton was present when the release was discovered. He observed diesel-saturated soil extending beyond the footprint of the secondary containment berm around Tank S-4. The berm on the south side of the Tank S-4 containment area had a known breach — a section where the earthen berm had eroded or been degraded to the point that it no longer provided effective containment — which allowed released product to migrate beyond the containment area into the surrounding soil. Mr. Pemberton stated that he observed product staining and petroleum odors in the soil outside the berm on the south side of the Tank S-4 area. He did not recall whether DTS formally documented the berm breach at that time, but he noted that DTS's subsequent efforts to encourage RCFD to repair its containment berms were in part prompted by the observations made during the 1996 release.

Mr. Pemberton did not recall the specific TCEQ incident number assigned to the 1996 release. He stated that RCFD handled the regulatory reporting for this incident, as it was an RCFD-operated tank, and that DTS was not directly involved in the regulatory correspondence.

B. 2001 Release — Tank S-7 (Approximately 3,200 Gallons Gasoline) — TCEQ Incident No. 142876

Mr. Pemberton provided detailed and emphatic testimony about the 2001 release from Tank S-7, which he characterized as a "significant incident" that RCFD failed to timely report to either DTS or the appropriate regulatory authorities.

Approximately 3,200 gallons of gasoline were released from Tank S-7 due to a piping connection failure at the tank's discharge manifold. The discharge manifold was the piping assembly connected to the bottom of the tank through which product was transferred out of the tank for delivery. Mr. Pemberton stated that the failure occurred at a flanged connection on the manifold, although he could not recall the precise mechanical details of the failure.

Delayed Reporting. Mr. Pemberton stated that the release occurred in approximately late March or early April 2001. However, RCFD did not report the release to DTS or to TCEQ until approximately two to three weeks after the release was first discovered by RCFD personnel. Mr. Pemberton was emphatic on this point, stating that the delay was inexcusable and that it had direct consequences for the extent of environmental contamination resulting from the release.

Mr. Pemberton learned of the release not through any notification from RCFD, but rather from a DTS operator working in the northern tank farm who noticed gasoline odors and a surface petroleum sheen in a drainage swale located south of the southern tank farm. Upon receiving this report, Mr. Pemberton (who was then the Operations Superintendent) investigated the matter and determined that the source of the gasoline was the Tank S-7 area in the southern tank farm.

When confronted with the evidence of the release, RCFD's site supervisor, Ray Cahill, initially minimized the incident. Mr. Pemberton recalled Mr. Cahill describing the release as "a minor drip" that had already been addressed by RCFD's personnel. Mr. Pemberton stated that this characterization was inconsistent with the volume of product that had been released and with the observable extent of contamination in the Tank S-7 area and the downstream drainage swale.

Mr. Pemberton escalated the matter to DTS management immediately. DTS's environmental compliance coordinator independently notified TCEQ of the release, which resulted in the assignment of TCEQ Incident No. 142876. Mr. Pemberton stated that DTS felt compelled to make its own independent notification to TCEQ because of concerns that RCFD's notification, if and when it came, would not accurately reflect the severity or timing of the release.

Environmental Consequences. Mr. Pemberton assessed that the two-to-three-week delay in reporting and response allowed released gasoline product to migrate into the subsurface soil and toward the shallow groundwater. The shallow groundwater at the Site is within the Chicot Aquifer, which is encountered at approximately twenty-two feet below ground surface in the vicinity of the southern tank farm. Mr. Pemberton expressed his belief that prompt detection and response — within twenty-four to forty-eight hours, as DTS's own reporting protocols required — would have significantly reduced the volume of product reaching the groundwater table.

Mr. Pemberton was aware that the 2001 Tank S-7 release area corresponds to the location where Pinehill Environmental Consulting LLC's Phase II Environmental Site Assessment ("Phase II ESA"), completed in April 2025, documented the most severe contamination at the Site. Specifically, the Phase II ESA documented maximum total petroleum hydrocarbons ("TPH") concentrations in soil of 14,200 milligrams per kilogram (mg/kg) in the Tank S-7 area and identified the Tank S-7 area as the likely origin of a dissolved benzene plume extending approximately 2,400 feet downgradient in a south-southwest direction within the Chicot Aquifer. Mr. Pemberton stated that this finding was consistent with what he would have expected given the volume of gasoline released, the nature of the release (gasoline being lighter and more mobile than diesel), and the delay in response that allowed free product to reach the water table.

C. 2008 Release — Tank S-11 (Approximately 5,600 Gallons Diesel) — TCEQ Incident No. 197503

Mr. Pemberton was the Operations Superintendent at the time of the Tank S-11 release in 2008 and was promoted to Senior Operations Manager later that same year. He had direct personal involvement in the discovery, reporting, and response to this release.

Approximately 5,600 gallons of diesel fuel were released from Tank S-11. The release was again attributed to tank bottom corrosion — the same failure mechanism that had caused the 1996 Tank S-4 release twelve years earlier. Mr. Pemberton noted that the recurrence of a tank bottom corrosion failure in the southern tank farm, following an earlier failure of the same type, was directly attributable to RCFD's continued refusal to implement corrosion monitoring or API 653-compliant tank inspections, despite DTS's repeated recommendations over the intervening twelve-year period.

Delayed Reporting. Mr. Pemberton testified that he was not notified by RCFD of the Tank S-11 release for approximately ten days after RCFD personnel first identified product loss from Tank S-11 through inventory reconciliation discrepancies. Mr. Pemberton stated that RCFD's inventory records would have shown unexplained product loss from Tank S-11, and that RCFD personnel were aware of the loss but did not immediately investigate or report it. When RCFD's on-site personnel eventually determined that the loss was attributable to a tank bottom leak, RCFD attempted to address the release internally by spreading absorbent material within the containment area around Tank S-11. RCFD did not notify DTS of the release during this initial response period.

Mr. Pemberton learned of the Tank S-11 release approximately ten days after RCFD's initial detection, at which point RCFD's site personnel informed DTS's operations staff. Upon learning of the release, Mr. Pemberton immediately contacted DTS management and recommended that DTS make a direct notification to TCEQ, given RCFD's demonstrated pattern of delayed reporting. DTS notified TCEQ, and the release was assigned TCEQ Incident No. 197503.

Containment Failures. Mr. Pemberton observed that the secondary containment around Tank S-11 had not been properly maintained at the time of the release. The earthen berm had settled in several locations, reducing its effective height below the design specification. Additionally, stormwater had been allowed to accumulate within the containment area, indicating that the containment area's stormwater drain valve was either open or non-functional. The presence of standing water within the containment area likely facilitated the migration of released diesel fuel into the surrounding soil by creating hydrostatic pressure that pushed contaminated water through the settled portions of the berm.

The volume of the Tank S-11 release — approximately 5,600 gallons — represented the largest single RCFD-attributable release during the entire period of the JOA.

D. 1996–2010 General Practices — Spill Containment and Housekeeping

Beyond the three documented major releases described above, Mr. Pemberton described a broader pattern of smaller, chronic spills, drips, and product losses within the southern tank farm that were attributable to RCFD's operations over the entire JOA period.

Mr. Pemberton stated that product staining and petroleum odors were commonly present around transfer piping, valves, loading connections, and pump stations in the southern tank farm. He described this as a visible and olfactory indication of ongoing, low-level product releases that were never formally documented or reported. Mr. Pemberton stated that these chronic conditions were evident to anyone who walked through the southern tank farm and that DTS personnel who had occasion to enter the S-farm area regularly remarked on the contrast between the conditions in the southern farm and the conditions maintained by DTS in the northern farm.

Mr. Pemberton contrasted RCFD's southern tank farm practices with DTS's northern tank farm practices. In the northern tank farm, DTS implemented the following measures, among others: regular valve maintenance on a scheduled preventive maintenance cycle; weekly inspections of secondary containment areas, including visual inspection of berms and verification that stormwater drain valves were in the closed position; prompt response to any observed drips, leaks, or spills, including immediate deployment of absorbent materials and, where warranted, excavation of impacted soil; and maintenance of detailed records documenting all inspections, maintenance activities, and spill responses. Mr. Pemberton stated that RCFD did not, to his knowledge, maintain a comparable program of routine inspection and preventive maintenance in the southern tank farm.

VI. DTS-Attributable Releases

Mr. Pemberton was forthcoming in acknowledging that DTS's operations at the Site were not without incident. He described two documented releases attributable to DTS's operations in the northern tank farm and at the shared loading rack facility, as follows.

A. 2003 Release — Tank N-3 (Approximately 1,500 Gallons Gasoline) — TCEQ Incident No. 158432

Mr. Pemberton acknowledged the 2003 release from Tank N-3 in the DTS-operated northern tank farm. Approximately 1,500 gallons of gasoline were released from Tank N-3 due to a weld failure on a tank shell-to-bottom seam. Mr. Pemberton was the Operations Superintendent at the time and was directly involved in the response to the release.

DTS reported the release to TCEQ promptly, within twenty-four hours of discovery, consistent with DTS's standard operating procedures and applicable TCEQ notification requirements. The release was assigned TCEQ Incident No. 158432. Immediately upon discovery of the release, DTS initiated a comprehensive response, including excavation of impacted soil in the area surrounding Tank N-3 and installation of temporary groundwater monitoring points to assess whether released product had migrated to the shallow groundwater table.

Pinehill Environmental Consulting LLC's Phase II ESA, completed in April 2025, documented maximum TPH concentrations of 8,750 mg/kg in the soil in the Tank N-3 area. Mr. Pemberton acknowledged that this represents a significant level of contamination and does not dispute that DTS bears responsibility for the Tank N-3 release. However, he noted several important distinctions between the Tank N-3 release and the RCFD-attributable releases in the southern tank farm:

(a) DTS reported the release promptly, within twenty-four hours, in contrast to RCFD's pattern of delayed reporting (two to three weeks for the 2001 Tank S-7 release; approximately ten days for the 2008 Tank S-11 release);

(b) DTS initiated immediate soil excavation and monitoring, whereas RCFD's response to its releases was delayed and, in the case of the 1996 Tank S-4 release, was described by Mr. Pemberton as "superficial"; and

(c) The volume of the Tank N-3 release (approximately 1,500 gallons) was significantly smaller than the cumulative volume of RCFD-attributable releases (approximately 16,800 gallons across the three documented releases from Tanks S-4, S-7, and S-11, not including chronic spills).

B. 2014 Release — Loading Rack (Approximately 600 Gallons Diesel) — TCEQ Incident No. 251044

Mr. Pemberton was the Senior Operations Manager at the time of the 2014 loading rack release. Approximately 600 gallons of diesel fuel were released at the truck loading rack area due to a hose failure during a product transfer operation. The loading rack was a shared facility used by both DTS and RCFD during the JOA period, and continued to be operated by DTS after RCFD's departure in 2010.

DTS reported the release to TCEQ within twenty-four hours of the incident, and it was assigned TCEQ Incident No. 251044. The release was relatively small in volume and was localized to the immediate loading rack area. DTS performed immediate containment, including deployment of absorbent booms and pads, and subsequently excavated and disposed of impacted soil from the affected area.

The truck loading rack facility was subsequently decommissioned when DTS ceased all operations at the Site in 2015.

VII. RCFD Reporting Practices and Environmental Compliance Concerns

Mr. Pemberton was asked to provide his overall assessment of RCFD's environmental compliance posture during the period of the JOA. He summarized RCFD's approach as "reactive rather than proactive" and "motivated by cost avoidance rather than environmental stewardship." Mr. Pemberton stated that this characterization was based on his direct observations over nearly two decades of working alongside RCFD at the Site and was not a conclusion reached in hindsight.

Mr. Pemberton identified the following specific environmental compliance concerns with respect to RCFD's operations:

SPCC Plan Deficiencies. RCFD was required under federal regulations (40 C.F.R. Part 112) to maintain an up-to-date Spill Prevention, Control, and Countermeasure ("SPCC") plan for its operations at the southern tank farm. Mr. Pemberton stated that, to his knowledge, RCFD did not maintain an SPCC plan that was current and compliant with applicable regulatory requirements during several years of Mr. Pemberton's oversight of the Site. Mr. Pemberton recalled raising this specific issue with RCFD's site supervisor, Ray Cahill, in approximately 2004. Mr. Cahill's response, as Mr. Pemberton recalled it, was noncommittal, and Mr. Pemberton was not aware of any corrective action taken by RCFD in response to this concern. Mr. Pemberton noted that DTS maintained its own SPCC plan for the northern tank farm, which was reviewed and updated on a regular basis as required by regulation.

Lack of Environmental Training. RCFD did not, to Mr. Pemberton's knowledge, conduct regular environmental training for its on-site personnel at the southern tank farm. Mr. Pemberton stated that DTS conducted annual environmental and safety training for all DTS employees at the Site, consistent with applicable OSHA and environmental regulatory requirements, and that he was not aware of any comparable training program being maintained by RCFD for its own employees. The absence of adequate environmental training among RCFD's workforce may have contributed to the delayed recognition and reporting of releases from the southern tank farm.

Pattern of Delayed Reporting. Mr. Pemberton emphasized that the two documented instances of delayed reporting — the approximately two-to-three-week delay in reporting the 2001 Tank S-7 release and the approximately ten-day delay in reporting the 2008 Tank S-11 release — represented a pattern of behavior rather than isolated incidents. He stated that these delays were not attributable to confusion or miscommunication but reflected a deliberate approach by RCFD to attempt to handle releases internally without involving DTS or regulatory agencies. Mr. Pemberton observed that RCFD appeared to view regulatory reporting as a last resort rather than a first response.

Potential Unreported Releases. Mr. Pemberton stated his belief that there may have been additional small releases from the southern tank farm during the JOA period that were never formally documented or reported by RCFD. He based this belief on his observations of chronic product staining and petroleum odors in the southern tank farm area (described in Section V.D above) and on the general pattern of RCFD's reluctance to report incidents. Mr. Pemberton could not identify specific unreported releases with certainty but stated that the observable conditions in the southern tank farm were inconsistent with a facility that had experienced only three significant releases over a nineteen-year period.

VIII. Pemberton's Knowledge of Post-2010 and Post-2015 Events

Mr. Pemberton was asked about his knowledge of events at the Site after RCFD's departure in 2010 and after DTS's cessation of operations in 2015. His knowledge of post-2010 and post-2015 events is summarized below.

Post-RCFD Departure (2010–2015). After RCFD's departure from the Site in 2010, DTS inherited the dormant southern tank farm. Mr. Pemberton, as Senior Operations Manager, oversaw the transition process. He stated that RCFD had not properly closed or decommissioned the southern tanks prior to its departure and had left the tanks, piping, and containment structures in a condition that required significant attention from DTS. DTS drained the remaining product from the S-farm tanks and secured the tanks in a non-operational state. However, DTS did not have the budget allocated for full decommissioning — including tank cleaning, inspection, removal, and site restoration — before DTS itself ceased operations in 2015. Mr. Pemberton stated that the cost of properly decommissioning twelve large aboveground storage tanks was substantial and exceeded the resources available to DTS in its final years of operation.

Pipeline disconnection (2016). Mr. Pemberton stated that the pipeline interconnects between the Dunmore Wharton Terminal and the Colonial Pipeline right-of-way were disconnected in 2016, after DTS's cessation of operations. Mr. Pemberton was not directly involved in this work, as he had left DTS's employment in 2015, but he was aware of the disconnection through industry contacts.

DTS Dissolution (2017). Mr. Pemberton was not involved in the DTS dissolution process. He was aware, in general terms, that DTS was formally dissolved, with a Plan of Dissolution dated October 15, 2017, and a formal dissolution effective December 31, 2017. He understood that the environmental liabilities associated with the Dunmore Wharton Terminal Site, among other assets and liabilities, were assigned to Dunmore Energy Holdings Ltd. as the surviving parent entity. Mr. Pemberton did not have any involvement in the allocation of liabilities between DTS and DEH and was not privy to the legal or financial details of the dissolution.

Calera Properties Group LLC. Mr. Pemberton stated that he had no knowledge of Calera Properties Group LLC's acquisition of the Site at tax foreclosure in March 2019 until he was contacted by Calderwood & Harkness LLP in June 2025 in connection with this investigation. He has had no contact with Calera Properties or its representatives.

IX. Documentary Evidence Referenced by Pemberton

Throughout the interview, Mr. Pemberton referenced a number of categories of documents that he believes exist within DTS's archived records, which are now in the possession of DEH. Mr. Pemberton stated that these documents, if located, would corroborate his testimony regarding RCFD's maintenance deficiencies, RCFD's delayed reporting of releases, and DTS's efforts to encourage RCFD to comply with industry standards. The categories of documents referenced by Mr. Pemberton are as follows:

1. Written recommendations from DTS to RCFD regarding tank inspections. Mr. Pemberton recalled that DTS sent written correspondence to RCFD's corporate offices in Austin on at least four occasions — in approximately 1997, 2002, 2005, and 2007 — recommending that RCFD conduct API 653-compliant internal inspections of the southern tank farm tanks. These letters would have been signed by the DTS Terminal Manager or Vice President of Operations and would have been addressed to Malcolm Griggs or other RCFD officers. Copies should be in DTS's outgoing correspondence files.

2. Internal DTS incident reports. DTS prepared internal incident reports for all significant releases at the Site, including the 1996 Tank S-4 release, the 2001 Tank S-7 release, the 2003 Tank N-3 release, the 2008 Tank S-11 release, and the 2014 loading rack release. These reports would document the date, time, cause, volume, and response actions for each release, as well as any regulatory notifications made.

3. Monthly operations reports. DTS prepared monthly operations reports for the Dunmore Wharton Terminal throughout its operational history (1991–2015). These reports included inventory data for all tanks, both in the northern and southern tank farms. Mr. Pemberton stated that the monthly operations reports for the southern tank farm would show inventory discrepancies during periods of product loss attributable to releases, and could be used to corroborate the timing and approximate volume of the documented releases.

4. Correspondence between DTS management and RCFD regarding maintenance deficiencies. In addition to the tank inspection recommendation letters referenced above, Mr. Pemberton recalled that DTS management sent other correspondence to RCFD addressing specific maintenance concerns, including secondary containment deficiencies, SPCC plan compliance, and operational practices. This correspondence would have been maintained in DTS's operational files.

5. DTS's SPCC plans and annual inspection checklists for the northern tank farm. These documents would demonstrate the standard of care that DTS applied to its own operations and would provide a contrast with RCFD's practices in the southern tank farm. The SPCC plans were required to be maintained on site and reviewed regularly under federal regulations.

6. Photographs of the southern tank farm containment area conditions. Mr. Pemberton recalled that DTS personnel photographed berm erosion and containment deficiencies in the southern tank farm in approximately 2004 and 2007. These photographs, if located, would provide contemporaneous visual documentation of the maintenance deficiencies described by Mr. Pemberton in Section IV of this memorandum.

Mr. Pemberton offered to assist in locating any of the above-referenced documents if provided access to the archived DTS files. He stated that he is familiar with DTS's filing system and record-keeping practices and believes he could help identify relevant files and boxes within the archived records.

X. Witness Availability and Willingness to Testify

Mr. Pemberton confirmed his willingness to serve as a fact witness in potential cost-recovery litigation against Rowan Creek Fuel Distributors, Inc. He stated that he has no reservations about testifying and that he believes it is important for the facts regarding RCFD's operations at the Site to be placed on the record.

Mr. Pemberton confirmed that he has no conflict of interest with any party to the potential litigation. He is not currently, and has not at any point been, employed by RCFD. He has no financial, familial, or personal relationship with any officer, director, or employee of RCFD. His only connection to any party is his prior employment with DTS, a dissolved subsidiary of DEH, which ended in 2015.

Mr. Pemberton indicated that he is generally available for deposition and trial testimony, subject to reasonable scheduling accommodation. He noted that his current part-time consulting work affords him scheduling flexibility, but he requested advance notice of any proceedings — ideally thirty days or more — so that he may arrange time away from his consulting commitments. He also requested that, to the extent practicable, depositions and other proceedings be scheduled in the Houston metropolitan area to minimize travel.

Mr. Pemberton's full contact information, including cellular telephone number, personal email address, and home address, is on file with Devon Archer at Calderwood & Harkness LLP.

XI. Assessment and Recommendations

Credibility. Mr. Pemberton presents as a highly credible and knowledgeable witness. He has twenty-seven years of direct experience at the Site, spanning the entire period of RCFD's operations under the JOA (1991–2010) and continuing through DTS's cessation of operations in 2015. His testimony is detailed, specific, and internally consistent. He was able to provide dates, names, approximate volumes, and descriptions of events that are corroborated by independent sources, including TCEQ incident records and Pinehill's Phase II ESA findings. He was candid in acknowledging DTS's own releases (the 2003 Tank N-3 release and the 2014 loading rack release), which enhances his credibility as a balanced and honest witness. He presented as calm, articulate, and willing to distinguish between matters he observed directly, matters he learned from others, and matters as to which he is uncertain. He did not appear to embellish or speculate beyond his personal knowledge.

Key Value. Mr. Pemberton's testimony is particularly valuable to DEH's cost-recovery claim on three critical points:

1. Delayed Reporting. Mr. Pemberton's testimony regarding RCFD's failure to timely report the 2001 Tank S-7 release (TCEQ Incident No. 142876, approximately two to three weeks of delay) and the 2008 Tank S-11 release (TCEQ Incident No. 197503, approximately ten days of delay) supports arguments that RCFD's culpability extends beyond the initial releases themselves. The delayed reporting allowed released product to migrate into soil and groundwater, exacerbating the contamination and increasing the scope and cost of the remediation now being undertaken by DEH. This testimony supports both CERCLA liability arguments and potential claims under state law for failure to comply with reporting obligations.

2. Systematic Resistance to Tank Inspections. Mr. Pemberton's testimony regarding RCFD's persistent refusal to conduct API 653-compliant tank inspections — over a nearly twenty-year period, despite repeated written recommendations from DTS — supports the argument that RCFD's operational negligence contributed directly to the tank bottom failures that caused the 1996 Tank S-4 and 2008 Tank S-11 releases. This testimony is relevant to allocation of response costs under CERCLA § 113(f) and to potential state-law claims for negligence or breach of the JOA.

3. Secondary Containment Deficiencies. Mr. Pemberton's testimony regarding RCFD's failure to maintain the earthen containment berms around the southern tanks supports the argument that RCFD's negligence facilitated the migration of released product beyond the immediate tank areas and into the surrounding soil and groundwater. The documented breaches and deterioration of the berms around Tanks S-4, S-7, S-9, and S-11 are directly relevant to the lateral extent of contamination documented in the Phase II ESA.

Document Retrieval. Based on Mr. Pemberton's testimony, it is recommended that the engagement team initiate an immediate and targeted search of DTS's archived records, now held by DEH, for the categories of documents identified in Section IX of this memorandum. Priority should be given to locating the written correspondence from DTS to RCFD regarding tank inspections (approximately 1997, 2002, 2005, and 2007), the internal incident reports for the 1996, 2001, 2003, 2008, and 2014 releases, and the photographs of southern tank farm containment conditions (approximately 2004 and 2007). These documents, if located, would provide contemporaneous documentary corroboration of Mr. Pemberton's testimony and would be highly relevant to DEH's cost-recovery claim. The asserted RCFD share of remediation costs is $4.26 million, and the total claimed recovery, including investigative costs, is $4.647 million. Strong documentary corroboration of Mr. Pemberton's testimony would significantly enhance DEH's litigation posture and settlement leverage.

Litigation Hold. The engagement team should confirm that the Litigation Hold Notice dated June 27, 2025, issued to DEH personnel, encompasses all categories of documents referenced by Mr. Pemberton in his testimony, as described in Section IX above. If the current scope of the litigation hold does not specifically identify DTS's archived operational files, outgoing correspondence files, incident reports, monthly operations reports, SPCC plans, inspection checklists, and photographic records, a supplemental litigation hold notice should be issued to DEH immediately, specifically identifying these categories and directing DEH personnel to preserve all such records.

Follow-Up Interview. The engagement team should consider scheduling a follow-up interview with Mr. Pemberton to address any specific questions arising from the document review process and from any additional investigation conducted after this interview. Additionally, if litigation is filed against RCFD in the United States District Court for the Southern District of Texas, Houston Division, Mr. Pemberton should be prepared for deposition through one or more preparation sessions. Given the strength and detail of his testimony, Mr. Pemberton is likely to be one of DEH's most important fact witnesses, and early preparation will be valuable.

XII. Signature block and Distribution

This memorandum was prepared by Devon Archer, Working Associate, Calderwood & Harkness LLP, based on the in-person witness interview conducted on July 2, 2025, and contemporaneous notes taken during that interview.

Prepared by:

________________________________________

Devon Archer Working Associate Calderwood & Harkness LLP 1200 McKinney Street, Suite 4100 Houston, Texas 77010

Date: July 3, 2025

Distribution: This memorandum is distributed to the following individuals only and is not to be distributed, copied, or disclosed to any person outside of the engagement team without the express written authorization of the Responsible Partner:

• Sandra Tung, Responsible Partner, Calderwood & Harkness LLP

• Cynthia Ho, Lead Associate, Calderwood & Harkness LLP

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

PREPARED IN ANTICIPATION OF LITIGATION — DO NOT DISTRIBUTE

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
PREPARED IN ANTICIPATION OF LITIGATION — DO NOT DISTRIBUTE
This memorandum is protected by the attorney work-product doctrine under Federal Rule of Civil Procedure 26(b)(3) and Texas Rule of Civil Procedure 192.5. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel at Calderwood & Harkness LLP, and has been prepared in anticipation of litigation. Any voluntary disclosure of this memorandum to third parties outside the scope of the attorney-client relationship may result in a waiver of work-product protection. This document should not be copied, distributed, or disclosed to any person not identified in the distribution list below without the express written authorization of the Responsible Partner.
MEMORANDUM
TO: Sandra Tung, Responsible Partner; Cynthia Ho, Lead Associate
FROM: Devon Archer, Working Associate
DATE: July 3, 2025
RE: Witness Interview Memorandum — Craig Pemberton, Former Senior Operations Manager, Dunmore Terminal Services, Inc.
MATTER: Dunmore Energy Holdings Ltd. — Voluntary Remediation & Cost-Recovery, Dunmore Wharton Terminal Site
MATTER NO.: 1016-00006
CLIENT: Dunmore Energy Holdings Ltd.
I. Purpose and Summary of Interview
This memorandum documents the substance of an in-person witness interview conducted by Devon Archer on July 2, 2025, at the offices of Calderwood & Harkness LLP, located at 1200 McKinney Street, Suite 4100, Houston, Texas 77010. The interview was conducted in a private conference room, and no other individuals were present during the interview. No audio or video recording of the interview was made; this memorandum was prepared from contemporaneous handwritten notes taken by Devon Archer during the interview and from Devon Archer's recollections immediately following the conclusion of the interview.
The witness interviewed was Craig Pemberton, the former Senior Operations Manager of Dunmore Terminal Services, Inc. ("DTS"), a wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH" or the "Client"). Mr. Pemberton is now retired from full-time petroleum terminal operations and resides in Katy, Texas. His current and historical contact information is on file with Devon Archer.
The interview commenced at approximately 9:00 a.m. Central Daylight Time and concluded at approximately 12:15 p.m. Central Daylight Time, for a total duration of approximately three hours and fifteen minutes. A brief comfort break of approximately ten minutes was taken at approximately 10:30 a.m.
The purpose of the interview was to gather firsthand factual testimony from Mr. Pemberton regarding the following subjects, in anticipation of potential cost-recovery litigation against Rowan Creek Fuel Distributors, Inc. ("RCFD"):
(a) RCFD's operations at the southern tank farm of the Dunmore Wharton Terminal site, located at 14200 FM 1301, Wharton, Wharton County, Texas 77488 (the "Site"), during the period of the 1991 Joint Operating Agreement between DTS and RCFD (the "JOA");
(b) the circumstances surrounding documented releases of petroleum products from RCFD-operated tanks at the southern tank farm, including the timing, cause, volume, and response associated with each such release;
(c) RCFD's maintenance and reporting practices with respect to tanks, secondary containment, spill prevention, and environmental regulatory compliance during the period of RCFD's operations at the Site; and
(d) any documentary evidence within DTS's or DEH's archived records that would corroborate Mr. Pemberton's testimony and support DEH's cost-recovery claims.
This interview was conducted in anticipation of potential cost-recovery litigation against RCFD under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a), and Section 361.344 of the Texas Health and Safety Code. The legal theories and strategies underlying this investigation, including the allocation of remediation costs among potentially responsible parties, are discussed in separate privileged memoranda and are not fully set forth herein.
Summary Conclusion: Mr. Pemberton's testimony strongly supports DEH's position that RCFD bears significant responsibility for the contamination documented in the southern tank farm area of the Site and that RCFD failed to fulfill its obligations under the JOA with respect to tank maintenance, spill reporting, and environmental compliance. Mr. Pemberton's account is detailed, internally consistent, and corroborated by the known release history documented in TCEQ incident records and the findings of Pinehill Environmental Consulting LLC's Phase II Environmental Site Assessment dated April 2025. Mr. Pemberton's testimony is particularly damaging to RCFD on the issues of delayed release reporting and systematic resistance to industry-standard tank inspection practices, both of which contributed to the scope and severity of contamination at the Site.
II. Witness Background and Employment History
Full Name: Craig Pemberton
Current Residence: Katy, Texas. Mr. Pemberton's specific residential address has been withheld from this memorandum for privacy purposes. His full contact information, including home address, cellular telephone number, and personal email address, is on file with Devon Archer at Calderwood & Harkness LLP.
Employment with DTS: Mr. Pemberton was employed by Dunmore Terminal Services, Inc. from 1988 to 2015, a period of approximately twenty-seven years. During this tenure, Mr. Pemberton held progressively responsible positions within DTS's terminal operations organization, as follows:
•  1988–1993: Operations Technician. Mr. Pemberton began his career at DTS as an entry-level Operations Technician at the Dunmore Wharton Terminal. In this capacity, he performed routine tank gauging, product transfer operations, valve maintenance, and general equipment monitoring. He reported to the on-shift Shift Supervisor.
•  1993–1999: Shift Supervisor. Mr. Pemberton was promoted to Shift Supervisor in 1993. In this role, he supervised a crew of three to five Operations Technicians during assigned shifts, managed product receipt and delivery scheduling, and was responsible for immediate spill response and incident reporting during his shifts. He reported to the Operations Superintendent.
•  1999–2008: Operations Superintendent. Mr. Pemberton was promoted to Operations Superintendent in 1999. In this capacity, he had supervisory responsibility over all shift operations at the Dunmore Wharton Terminal, including personnel management, scheduling, maintenance coordination, and regulatory compliance oversight. He reported to the Terminal Manager (a position that was later retitled Vice President of Operations).
•  2008–2015: Senior Operations Manager. Mr. Pemberton was promoted to Senior Operations Manager in 2008, a role he held until DTS ceased operations in 2015. As Senior Operations Manager, Mr. Pemberton had overall responsibility for day-to-day terminal operations at the Dunmore Wharton Terminal. His responsibilities included oversight of the northern tank farm (Tanks N-1 through N-12, with a total shell capacity of approximately 420,000 barrels, operated directly by DTS) and coordination with RCFD regarding the southern tank farm (Tanks S-1 through S-12, with a total shell capacity of approximately 315,000 barrels, operated by RCFD under the JOA from 1991 to 2010). He reported directly to the DTS Terminal Manager and, subsequently, the Vice President of Operations.
Post-DTS Employment: Mr. Pemberton retired from full-time petroleum terminal operations upon DTS's cessation of operations in 2015. He is currently employed on a part-time basis as a safety consultant for an unrelated industrial contractor in the Houston metropolitan area. Mr. Pemberton's current consulting work does not involve any of the parties to the potential litigation and does not relate to the Dunmore Wharton Terminal or the petroleum terminal industry in the Wharton County area.
Reporting Structure: Throughout the majority of his tenure at DTS, Mr. Pemberton reported directly to the DTS Terminal Manager, a position that was held by several individuals over the years and was later retitled Vice President of Operations. Mr. Pemberton did not identify the specific names of all individuals who held this position during his employment but indicated that he could provide those names if given access to DTS's organizational records.
Presence at Key Events: Mr. Pemberton confirmed that he was physically present at the Site during all four documented RCFD-related releases (the 1996 Tank S-4 release, the 2001 Tank S-7 release, the 2008 Tank S-11 release, and the general pattern of chronic spills described in Section V.D below) and the two DTS-attributable releases (the 2003 Tank N-3 release and the 2014 loading rack release). His direct involvement in or observation of these events is described in detail in Sections V and VI of this memorandum.
Financial Independence: Mr. Pemberton stated affirmatively that he has no ongoing financial relationship with DEH, DTS, or any successor entity of either. He is not receiving any compensation for this interview or for his cooperation with Calderwood & Harkness LLP's investigation, beyond reimbursement of reasonable travel expenses incurred in connection with his travel from Katy to Houston for the interview. Mr. Pemberton has no equity interest, pension, deferred compensation, or other financial stake in DEH or any affiliated entity.
III. Overview of RCFD Joint Operating Agreement and Southern Tank Farm Operations
A. Execution of the JOA (1991)
Mr. Pemberton recalled that the Joint Operating Agreement between DTS and Rowan Creek Fuel Distributors, Inc. was executed in 1991. At the time of the JOA's execution, Mr. Pemberton was employed as an Operations Technician and was therefore not involved in the negotiation or drafting of the agreement. However, he became familiar with the terms and operational implications of the JOA through his subsequent roles and through direct observation of RCFD's operations over the following nineteen years.
Under the JOA, RCFD was granted operational control of the southern tank farm at the Dunmore Wharton Terminal — specifically, Tanks S-1 through S-12, which were situated on approximately eighteen acres of the total 48.7-acre Site. The southern tank farm was physically separated from the northern tank farm by an internal access road and a series of interconnecting pipelines, but both tank farms shared certain common infrastructure, including the truck loading rack, the pipeline metering station, and the Site's stormwater management system.
Mr. Pemberton confirmed that RCFD's president at the time of the JOA execution was Malcolm Griggs. Mr. Pemberton further confirmed, based on his own knowledge and industry contacts, that Mr. Griggs remains RCFD's president to this day. RCFD is understood to be headquartered in Austin, Texas.
Under the terms of the JOA, as Mr. Pemberton understood them, RCFD assumed the following responsibilities with respect to the southern tank farm:
(a) Day-to-day operation of Tanks S-1 through S-12, including product receipt, storage, blending, and delivery;
(b) Routine maintenance and inspection of the southern tanks and all associated equipment, including piping, valves, pumps, manifolds, and secondary containment structures;
(c) Compliance with all applicable federal, state, and local environmental and safety regulations, including but not limited to the Clean Water Act, the Resource Conservation and Recovery Act, applicable TCEQ regulations, and OSHA standards;
(d) Prompt reporting of any releases, spills, or other environmental incidents to DTS and to all relevant regulatory agencies, including the Texas Commission on Environmental Quality ("TCEQ" or its predecessor agency, the Texas Natural Resource Conservation Commission); and
(e) Maintenance of adequate insurance coverage for its operations at the southern tank farm.
DTS, for its part, retained overall site management responsibility and ownership of the underlying real property and permanent infrastructure, including the tank shells, foundations, containment berms, and pipeline interconnections. However, operational control of the southern tank farm — including the personnel, equipment, and day-to-day decision-making authority — rested with RCFD during the term of the JOA.
Mr. Pemberton emphasized that the division of operational responsibility was understood clearly by both DTS and RCFD personnel on the ground, and that RCFD operated the southern tank farm with its own employees, its own supervisory structure, and its own equipment. DTS personnel did not routinely enter the southern tank farm operating area during normal operations, although DTS management retained the right to inspect the southern tank farm and did so on an intermittent basis, as described further below.
B. RCFD's Staffing and Operations
Mr. Pemberton stated that RCFD maintained a crew of approximately eight to twelve workers at the southern tank farm during peak operations. The size of RCFD's on-site workforce varied over the life of the JOA, with staffing levels generally declining after approximately 2005 as throughput volumes decreased.
RCFD's operations at the southern tank farm primarily involved the receipt, storage, and distribution of refined petroleum products, specifically diesel fuel and various grades of gasoline. Mr. Pemberton did not recall RCFD handling crude oil or other unrefined products at the Site. Product was received both by pipeline (via interconnection with the Colonial Pipeline system) and by truck, and was delivered to customers primarily by truck from the shared loading rack facility.
Mr. Pemberton observed that RCFD's operational practices differed from DTS's standards in several material respects, which are detailed in Section IV of this memorandum. In general terms, Mr. Pemberton characterized RCFD's approach to maintenance and environmental compliance as less rigorous than DTS's approach, and he noted that this disparity was a source of ongoing concern and friction between DTS and RCFD operations personnel throughout the duration of the JOA.
RCFD maintained its own on-site supervisor who served as the primary point of contact between RCFD's field operations and DTS's site management. Mr. Pemberton recalled the name "Ray Cahill" as a long-time RCFD site supervisor who was present at the Site from approximately 1993 through 2008. Mr. Pemberton interacted with Mr. Cahill regularly throughout this period and described Mr. Cahill as the individual who was most frequently responsible for communicating — or failing to communicate — information about RCFD's operations and incidents to DTS. Mr. Pemberton did not recall the name of Mr. Cahill's replacement after 2008, stating only that RCFD's on-site presence was significantly reduced in the final two years of the JOA.
C. Termination of JOA (2010)
The JOA was terminated in 2010, and RCFD ceased all operations at the Site at that time. Mr. Pemberton was the Senior Operations Manager during the termination process and was directly involved in coordinating the transition of the southern tank farm from RCFD's operational control back to DTS.
Mr. Pemberton stated that the termination of the JOA was prompted by a combination of factors, including: (a) ongoing operational disagreements between DTS and RCFD regarding maintenance standards, inspection practices, and environmental compliance at the southern tank farm; (b) declining throughput volumes at the southern tank farm, which had reduced RCFD's commercial interest in maintaining operations at the Site; and (c) a general deterioration of the business relationship between DTS and RCFD management. Mr. Pemberton did not recall the specific contractual mechanism by which the JOA was terminated (e.g., whether it was terminated for cause or upon expiration of its term) but stated that the termination was not amicable and that there was significant disagreement between DTS and RCFD regarding the condition of the southern tank farm at the time of RCFD's departure.
After RCFD's departure in 2010, DTS assumed responsibility for the dormant southern tank farm tanks. DTS drained the remaining product from the S-farm tanks and took them out of active service. However, the tanks were not formally decommissioned, closed, or removed before DTS itself ceased all operations at the Site in 2015. Mr. Pemberton attributed this to budgetary constraints faced by DTS in its final years of operation, as well as uncertainty regarding the future disposition of the Site.
IV. Tank Condition and Maintenance Practices Under RCFD Control
A. General Observations on RCFD Maintenance Standards
Mr. Pemberton described RCFD's maintenance of the southern tank farm over the period of the JOA (1991–2010) as "consistently below the standard we maintained in the northern farm." Mr. Pemberton stated this assessment plainly and without hedging, and he provided specific examples to support his characterization. He noted that the disparity in maintenance standards between the two tank farms was observable to anyone who walked both areas and that DTS personnel frequently commented on the difference.
The specific maintenance deficiencies observed by Mr. Pemberton during RCFD's period of operational control included the following:
Secondary Containment. RCFD's earthen berms around the southern tanks were frequently in a state of disrepair. Mr. Pemberton personally observed erosion, rodent burrowing, and breaches in the bermed containment areas around Tanks S-4, S-7, S-9, and S-11 on multiple occasions over the years. The containment berms around these tanks were earthen structures designed to contain the full volume of the largest tank within each containment area in the event of a catastrophic release, consistent with applicable SPCC requirements. However, Mr. Pemberton stated that RCFD did not perform regular maintenance on the berms, resulting in deterioration that compromised their containment integrity. He recalled specific instances in which rainwater had pooled within the containment areas because stormwater drain valves had been left open or were inoperable, and instances in which berm walls had slumped to the point where they would not have contained a significant release. Mr. Pemberton noted that these conditions were documented by DTS personnel on at least two occasions (discussed further in Section IX below regarding photographs taken in approximately 2004 and 2007).
Tank Bottom Inspections. DTS recommended that all tanks at the Site undergo internal inspections in accordance with API Standard 653 ("Tank Inspection, Repair, Alteration, and Reconstruction") on a ten-year cycle. This recommendation was consistent with industry best practices for aboveground storage tanks in petroleum service and was the standard that DTS applied to its own tanks in the northern tank farm. RCFD routinely deferred or declined tank bottom inspections for the southern tanks, citing cost concerns. Mr. Pemberton stated that, to his knowledge, RCFD did not perform a single API 653-compliant internal inspection on any of the twelve southern tank farm tanks during the entire nineteen-year period of RCFD's operation under the JOA. Mr. Pemberton acknowledged that he could not state with absolute certainty that no such inspection ever occurred, as he did not have access to all of RCFD's internal maintenance records, but he stated that he was never informed of any such inspection, and that DTS's repeated requests for RCFD to conduct such inspections were consistently rebuffed.
Corrosion Monitoring. Mr. Pemberton noted that RCFD did not, to his knowledge, implement cathodic protection systems or conduct regular ultrasonic thickness testing on the southern tanks during the period of RCFD's operation. Cathodic protection is a widely used corrosion-prevention technique for aboveground storage tank bottoms, and ultrasonic thickness testing is a standard non-destructive method for assessing the remaining thickness of tank bottom plates and shell plates. The absence of both corrosion-prevention and corrosion-monitoring measures on the southern tanks is directly relevant to the tank bottom corrosion failures that caused the 1996 Tank S-4 release and the 2008 Tank S-11 release, as discussed in Section V below.
Overfill Prevention. Mr. Pemberton recalled at least two near-miss overfill incidents at southern tank farm tanks, occurring in approximately 1998 and 2005, that were attributable to RCFD's failure to maintain or calibrate high-level alarms on the tanks. In each instance, product levels in a southern tank rose above safe operating limits before being detected by RCFD personnel. Mr. Pemberton stated that neither near-miss resulted in a release of product outside the tank, but that both incidents were indicative of RCFD's inadequate attention to critical safety and environmental protection equipment. He contrasted this with DTS's practice in the northern tank farm of testing and calibrating high-level alarms on a quarterly basis.
B. RCFD Personnel's Resistance to DTS-Recommended Inspections
Mr. Pemberton stated that, beginning in approximately 1997, DTS management — including Mr. Pemberton himself after his promotion to Operations Superintendent in 1999 — repeatedly recommended that RCFD conduct internal tank inspections per API Standard 653 on the southern tank farm tanks. These recommendations were made both informally, during routine operational coordination meetings between DTS and RCFD site personnel, and formally, through written correspondence from DTS management to RCFD's corporate offices in Austin.
RCFD's site supervisor, Ray Cahill, and RCFD's corporate management, including President Malcolm Griggs, pushed back against these recommendations on multiple occasions. Mr. Pemberton stated that RCFD's response to DTS's inspection recommendations was consistently dismissive. RCFD took the position that the southern tanks were performing adequately, that internal inspections would be unnecessarily costly and disruptive to operations, and that RCFD's own maintenance practices were sufficient to ensure tank integrity.
Mr. Pemberton recalled a specific meeting that occurred in approximately 2002 or 2003 at the Site — he could not recall the precise date but believed it was within that two-year window. At this meeting, Mr. Pemberton, who was then the Operations Superintendent, presented DTS's concerns about the integrity of the southern tank farm tanks to Ray Cahill and an RCFD vice president whose name Mr. Pemberton recalled as "Doug Falconer." Mr. Pemberton stated that he presented data on the age of the tanks, the absence of internal inspections, and the history of the 1996 Tank S-4 release as evidence of the need for a systematic inspection program. RCFD declined to schedule inspections, with Mr. Falconer stating that the inspections were "unnecessary and cost-prohibitive." Mr. Pemberton recalled being frustrated by this response and escalating the matter to DTS's Terminal Manager, who directed that DTS's position be memorialized in writing to RCFD.
Mr. Pemberton stated that DTS memorialized at least some of its inspection recommendations and maintenance concerns in written correspondence sent to RCFD's corporate offices. He believes that copies of this correspondence may exist in DTS's archived files, which are now in the possession of DEH. The specific dates and content of this correspondence are discussed further in Section IX of this memorandum.
In summarizing RCFD's approach to tank maintenance, Mr. Pemberton characterized RCFD's philosophy as "run it until it breaks." He stated that this was not an exaggeration or a characterization made with the benefit of hindsight, but rather a description that he and other DTS personnel used contemporaneously to describe RCFD's maintenance approach. Mr. Pemberton stated that the disparity between RCFD's and DTS's maintenance philosophies was a persistent source of friction between the two operations teams throughout the duration of the JOA and was one of the factors that ultimately contributed to the termination of the agreement in 2010.
V. Documented Releases — RCFD-Operated Tanks
A. 1996 Release — Tank S-4 (Approximately 8,000 Gallons Diesel)
Mr. Pemberton recalled the 1996 release from Tank S-4 as the first major release from the southern tank farm under RCFD's operations. Mr. Pemberton was a Shift Supervisor at the time and was on duty or on site when the release was discovered.
The release involved approximately 8,000 gallons of diesel fuel and was attributed to a corroded tank bottom plate on Tank S-4. The corrosion had progressed to the point of penetrating the tank bottom, allowing product to leak from the tank into the underlying soil within the secondary containment area. Mr. Pemberton stated that the specific mechanism of failure — bottom plate corrosion — was consistent with the lack of corrosion monitoring and the absence of API 653-compliant inspections that characterized RCFD's maintenance program, as discussed in Section IV above.
RCFD reported the 1996 release to TCEQ and performed a partial cleanup of the affected area. However, Mr. Pemberton stated that the cleanup was "superficial" in nature. Specifically, RCFD excavated visibly contaminated soil in the immediate area of the tank, but did not perform any subsurface investigation — such as soil borings or monitoring well installation — to assess the full lateral or vertical extent of the release. Mr. Pemberton stated that it was his professional assessment, based on his experience in petroleum terminal operations, that the volume of product released (approximately 8,000 gallons) could not have been fully recovered through the limited surface excavation that RCFD performed.
Mr. Pemberton was present when the release was discovered. He observed diesel-saturated soil extending beyond the footprint of the secondary containment berm around Tank S-4. The berm on the south side of the Tank S-4 containment area had a known breach — a section where the earthen berm had eroded or been degraded to the point that it no longer provided effective containment — which allowed released product to migrate beyond the containment area into the surrounding soil. Mr. Pemberton stated that he observed product staining and petroleum odors in the soil outside the berm on the south side of the Tank S-4 area. He did not recall whether DTS formally documented the berm breach at that time, but he noted that DTS's subsequent efforts to encourage RCFD to repair its containment berms were in part prompted by the observations made during the 1996 release.
Mr. Pemberton did not recall the specific TCEQ incident number assigned to the 1996 release. He stated that RCFD handled the regulatory reporting for this incident, as it was an RCFD-operated tank, and that DTS was not directly involved in the regulatory correspondence.
B. 2001 Release — Tank S-7 (Approximately 3,200 Gallons Gasoline) — TCEQ Incident No. 142876
Mr. Pemberton provided detailed and emphatic testimony about the 2001 release from Tank S-7, which he characterized as a "significant incident" that RCFD failed to timely report to either DTS or the appropriate regulatory authorities.
Approximately 3,200 gallons of gasoline were released from Tank S-7 due to a piping connection failure at the tank's discharge manifold. The discharge manifold was the piping assembly connected to the bottom of the tank through which product was transferred out of the tank for delivery. Mr. Pemberton stated that the failure occurred at a flanged connection on the manifold, although he could not recall the precise mechanical details of the failure.
Delayed Reporting. Mr. Pemberton stated that the release occurred in approximately late March or early April 2001. However, RCFD did not report the release to DTS or to TCEQ until approximately two to three weeks after the release was first discovered by RCFD personnel. Mr. Pemberton was emphatic on this point, stating that the delay was inexcusable and that it had direct consequences for the extent of environmental contamination resulting from the release.
Mr. Pemberton learned of the release not through any notification from RCFD, but rather from a DTS operator working in the northern tank farm who noticed gasoline odors and a surface petroleum sheen in a drainage swale located south of the southern tank farm. Upon receiving this report, Mr. Pemberton (who was then the Operations Superintendent) investigated the matter and determined that the source of the gasoline was the Tank S-7 area in the southern tank farm.
When confronted with the evidence of the release, RCFD's site supervisor, Ray Cahill, initially minimized the incident. Mr. Pemberton recalled Mr. Cahill describing the release as "a minor drip" that had already been addressed by RCFD's personnel. Mr. Pemberton stated that this characterization was inconsistent with the volume of product that had been released and with the observable extent of contamination in the Tank S-7 area and the downstream drainage swale.
Mr. Pemberton escalated the matter to DTS management immediately. DTS's environmental compliance coordinator independently notified TCEQ of the release, which resulted in the assignment of TCEQ Incident No. 142876. Mr. Pemberton stated that DTS felt compelled to make its own independent notification to TCEQ because of concerns that RCFD's notification, if and when it came, would not accurately reflect the severity or timing of the release.
Environmental Consequences. Mr. Pemberton assessed that the two-to-three-week delay in reporting and response allowed released gasoline product to migrate into the subsurface soil and toward the shallow groundwater. The shallow groundwater at the Site is within the Chicot Aquifer, which is encountered at approximately twenty-two feet below ground surface in the vicinity of the southern tank farm. Mr. Pemberton expressed his belief that prompt detection and response — within twenty-four to forty-eight hours, as DTS's own reporting protocols required — would have significantly reduced the volume of product reaching the groundwater table.
Mr. Pemberton was aware that the 2001 Tank S-7 release area corresponds to the location where Pinehill Environmental Consulting LLC's Phase II Environmental Site Assessment ("Phase II ESA"), completed in April 2025, documented the most severe contamination at the Site. Specifically, the Phase II ESA documented maximum total petroleum hydrocarbons ("TPH") concentrations in soil of 14,200 milligrams per kilogram (mg/kg) in the Tank S-7 area and identified the Tank S-7 area as the likely origin of a dissolved benzene plume extending approximately 2,400 feet downgradient in a south-southwest direction within the Chicot Aquifer. Mr. Pemberton stated that this finding was consistent with what he would have expected given the volume of gasoline released, the nature of the release (gasoline being lighter and more mobile than diesel), and the delay in response that allowed free product to reach the water table.
C. 2008 Release — Tank S-11 (Approximately 5,600 Gallons Diesel) — TCEQ Incident No. 197503
Mr. Pemberton was the Operations Superintendent at the time of the Tank S-11 release in 2008 and was promoted to Senior Operations Manager later that same year. He had direct personal involvement in the discovery, reporting, and response to this release.
Approximately 5,600 gallons of diesel fuel were released from Tank S-11. The release was again attributed to tank bottom corrosion — the same failure mechanism that had caused the 1996 Tank S-4 release twelve years earlier. Mr. Pemberton noted that the recurrence of a tank bottom corrosion failure in the southern tank farm, following an earlier failure of the same type, was directly attributable to RCFD's continued refusal to implement corrosion monitoring or API 653-compliant tank inspections, despite DTS's repeated recommendations over the intervening twelve-year period.
Delayed Reporting. Mr. Pemberton testified that he was not notified by RCFD of the Tank S-11 release for approximately ten days after RCFD personnel first identified product loss from Tank S-11 through inventory reconciliation discrepancies. Mr. Pemberton stated that RCFD's inventory records would have shown unexplained product loss from Tank S-11, and that RCFD personnel were aware of the loss but did not immediately investigate or report it. When RCFD's on-site personnel eventually determined that the loss was attributable to a tank bottom leak, RCFD attempted to address the release internally by spreading absorbent material within the containment area around Tank S-11. RCFD did not notify DTS of the release during this initial response period.
Mr. Pemberton learned of the Tank S-11 release approximately ten days after RCFD's initial detection, at which point RCFD's site personnel informed DTS's operations staff. Upon learning of the release, Mr. Pemberton immediately contacted DTS management and recommended that DTS make a direct notification to TCEQ, given RCFD's demonstrated pattern of delayed reporting. DTS notified TCEQ, and the release was assigned TCEQ Incident No. 197503.
Containment Failures. Mr. Pemberton observed that the secondary containment around Tank S-11 had not been properly maintained at the time of the release. The earthen berm had settled in several locations, reducing its effective height below the design specification. Additionally, stormwater had been allowed to accumulate within the containment area, indicating that the containment area's stormwater drain valve was either open or non-functional. The presence of standing water within the containment area likely facilitated the migration of released diesel fuel into the surrounding soil by creating hydrostatic pressure that pushed contaminated water through the settled portions of the berm.
The volume of the Tank S-11 release — approximately 5,600 gallons — represented the largest single RCFD-attributable release during the entire period of the JOA.
D. 1996–2010 General Practices — Spill Containment and Housekeeping
Beyond the three documented major releases described above, Mr. Pemberton described a broader pattern of smaller, chronic spills, drips, and product losses within the southern tank farm that were attributable to RCFD's operations over the entire JOA period.
Mr. Pemberton stated that product staining and petroleum odors were commonly present around transfer piping, valves, loading connections, and pump stations in the southern tank farm. He described this as a visible and olfactory indication of ongoing, low-level product releases that were never formally documented or reported. Mr. Pemberton stated that these chronic conditions were evident to anyone who walked through the southern tank farm and that DTS personnel who had occasion to enter the S-farm area regularly remarked on the contrast between the conditions in the southern farm and the conditions maintained by DTS in the northern farm.
Mr. Pemberton contrasted RCFD's southern tank farm practices with DTS's northern tank farm practices. In the northern tank farm, DTS implemented the following measures, among others: regular valve maintenance on a scheduled preventive maintenance cycle; weekly inspections of secondary containment areas, including visual inspection of berms and verification that stormwater drain valves were in the closed position; prompt response to any observed drips, leaks, or spills, including immediate deployment of absorbent materials and, where warranted, excavation of impacted soil; and maintenance of detailed records documenting all inspections, maintenance activities, and spill responses. Mr. Pemberton stated that RCFD did not, to his knowledge, maintain a comparable program of routine inspection and preventive maintenance in the southern tank farm.
VI. DTS-Attributable Releases
Mr. Pemberton was forthcoming in acknowledging that DTS's operations at the Site were not without incident. He described two documented releases attributable to DTS's operations in the northern tank farm and at the shared loading rack facility, as follows.
A. 2003 Release — Tank N-3 (Approximately 1,500 Gallons Gasoline) — TCEQ Incident No. 158432
Mr. Pemberton acknowledged the 2003 release from Tank N-3 in the DTS-operated northern tank farm. Approximately 1,500 gallons of gasoline were released from Tank N-3 due to a weld failure on a tank shell-to-bottom seam. Mr. Pemberton was the Operations Superintendent at the time and was directly involved in the response to the release.
DTS reported the release to TCEQ promptly, within twenty-four hours of discovery, consistent with DTS's standard operating procedures and applicable TCEQ notification requirements. The release was assigned TCEQ Incident No. 158432. Immediately upon discovery of the release, DTS initiated a comprehensive response, including excavation of impacted soil in the area surrounding Tank N-3 and installation of temporary groundwater monitoring points to assess whether released product had migrated to the shallow groundwater table.
Pinehill Environmental Consulting LLC's Phase II ESA, completed in April 2025, documented maximum TPH concentrations of 8,750 mg/kg in the soil in the Tank N-3 area. Mr. Pemberton acknowledged that this represents a significant level of contamination and does not dispute that DTS bears responsibility for the Tank N-3 release. However, he noted several important distinctions between the Tank N-3 release and the RCFD-attributable releases in the southern tank farm:
(a) DTS reported the release promptly, within twenty-four hours, in contrast to RCFD's pattern of delayed reporting (two to three weeks for the 2001 Tank S-7 release; approximately ten days for the 2008 Tank S-11 release);
(b) DTS initiated immediate soil excavation and monitoring, whereas RCFD's response to its releases was delayed and, in the case of the 1996 Tank S-4 release, was described by Mr. Pemberton as "superficial"; and
(c) The volume of the Tank N-3 release (approximately 1,500 gallons) was significantly smaller than the cumulative volume of RCFD-attributable releases (approximately 16,800 gallons across the three documented releases from Tanks S-4, S-7, and S-11, not including chronic spills).
B. 2014 Release — Loading Rack (Approximately 600 Gallons Diesel) — TCEQ Incident No. 251044
Mr. Pemberton was the Senior Operations Manager at the time of the 2014 loading rack release. Approximately 600 gallons of diesel fuel were released at the truck loading rack area due to a hose failure during a product transfer operation. The loading rack was a shared facility used by both DTS and RCFD during the JOA period, and continued to be operated by DTS after RCFD's departure in 2010.
DTS reported the release to TCEQ within twenty-four hours of the incident, and it was assigned TCEQ Incident No. 251044. The release was relatively small in volume and was localized to the immediate loading rack area. DTS performed immediate containment, including deployment of absorbent booms and pads, and subsequently excavated and disposed of impacted soil from the affected area.
The truck loading rack facility was subsequently decommissioned when DTS ceased all operations at the Site in 2015.
VII. RCFD Reporting Practices and Environmental Compliance Concerns
Mr. Pemberton was asked to provide his overall assessment of RCFD's environmental compliance posture during the period of the JOA. He summarized RCFD's approach as "reactive rather than proactive" and "motivated by cost avoidance rather than environmental stewardship." Mr. Pemberton stated that this characterization was based on his direct observations over nearly two decades of working alongside RCFD at the Site and was not a conclusion reached in hindsight.
Mr. Pemberton identified the following specific environmental compliance concerns with respect to RCFD's operations:
SPCC Plan Deficiencies. RCFD was required under federal regulations (40 C.F.R. Part 112) to maintain an up-to-date Spill Prevention, Control, and Countermeasure ("SPCC") plan for its operations at the southern tank farm. Mr. Pemberton stated that, to his knowledge, RCFD did not maintain an SPCC plan that was current and compliant with applicable regulatory requirements during several years of Mr. Pemberton's oversight of the Site. Mr. Pemberton recalled raising this specific issue with RCFD's site supervisor, Ray Cahill, in approximately 2004. Mr. Cahill's response, as Mr. Pemberton recalled it, was noncommittal, and Mr. Pemberton was not aware of any corrective action taken by RCFD in response to this concern. Mr. Pemberton noted that DTS maintained its own SPCC plan for the northern tank farm, which was reviewed and updated on a regular basis as required by regulation.
Lack of Environmental Training. RCFD did not, to Mr. Pemberton's knowledge, conduct regular environmental training for its on-site personnel at the southern tank farm. Mr. Pemberton stated that DTS conducted annual environmental and safety training for all DTS employees at the Site, consistent with applicable OSHA and environmental regulatory requirements, and that he was not aware of any comparable training program being maintained by RCFD for its own employees. The absence of adequate environmental training among RCFD's workforce may have contributed to the delayed recognition and reporting of releases from the southern tank farm.
Pattern of Delayed Reporting. Mr. Pemberton emphasized that the two documented instances of delayed reporting — the approximately two-to-three-week delay in reporting the 2001 Tank S-7 release and the approximately ten-day delay in reporting the 2008 Tank S-11 release — represented a pattern of behavior rather than isolated incidents. He stated that these delays were not attributable to confusion or miscommunication but reflected a deliberate approach by RCFD to attempt to handle releases internally without involving DTS or regulatory agencies. Mr. Pemberton observed that RCFD appeared to view regulatory reporting as a last resort rather than a first response.
Potential Unreported Releases. Mr. Pemberton stated his belief that there may have been additional small releases from the southern tank farm during the JOA period that were never formally documented or reported by RCFD. He based this belief on his observations of chronic product staining and petroleum odors in the southern tank farm area (described in Section V.D above) and on the general pattern of RCFD's reluctance to report incidents. Mr. Pemberton could not identify specific unreported releases with certainty but stated that the observable conditions in the southern tank farm were inconsistent with a facility that had experienced only three significant releases over a nineteen-year period.
VIII. Pemberton's Knowledge of Post-2010 and Post-2015 Events
Mr. Pemberton was asked about his knowledge of events at the Site after RCFD's departure in 2010 and after DTS's cessation of operations in 2015. His knowledge of post-2010 and post-2015 events is summarized below.
Post-RCFD Departure (2010–2015). After RCFD's departure from the Site in 2010, DTS inherited the dormant southern tank farm. Mr. Pemberton, as Senior Operations Manager, oversaw the transition process. He stated that RCFD had not properly closed or decommissioned the southern tanks prior to its departure and had left the tanks, piping, and containment structures in a condition that required significant attention from DTS. DTS drained the remaining product from the S-farm tanks and secured the tanks in a non-operational state. However, DTS did not have the budget allocated for full decommissioning — including tank cleaning, inspection, removal, and site restoration — before DTS itself ceased operations in 2015. Mr. Pemberton stated that the cost of properly decommissioning twelve large aboveground storage tanks was substantial and exceeded the resources available to DTS in its final years of operation.
Pipeline disconnection (2016). Mr. Pemberton stated that the pipeline interconnects between the Dunmore Wharton Terminal and the Colonial Pipeline right-of-way were disconnected in 2016, after DTS's cessation of operations. Mr. Pemberton was not directly involved in this work, as he had left DTS's employment in 2015, but he was aware of the disconnection through industry contacts.
DTS Dissolution (2017). Mr. Pemberton was not involved in the DTS dissolution process. He was aware, in general terms, that DTS was formally dissolved, with a Plan of Dissolution dated October 15, 2017, and a formal dissolution effective December 31, 2017. He understood that the environmental liabilities associated with the Dunmore Wharton Terminal Site, among other assets and liabilities, were assigned to Dunmore Energy Holdings Ltd. as the surviving parent entity. Mr. Pemberton did not have any involvement in the allocation of liabilities between DTS and DEH and was not privy to the legal or financial details of the dissolution.
Calera Properties Group LLC. Mr. Pemberton stated that he had no knowledge of Calera Properties Group LLC's acquisition of the Site at tax foreclosure in March 2019 until he was contacted by Calderwood & Harkness LLP in June 2025 in connection with this investigation. He has had no contact with Calera Properties or its representatives.
IX. Documentary Evidence Referenced by Pemberton
Throughout the interview, Mr. Pemberton referenced a number of categories of documents that he believes exist within DTS's archived records, which are now in the possession of DEH. Mr. Pemberton stated that these documents, if located, would corroborate his testimony regarding RCFD's maintenance deficiencies, RCFD's delayed reporting of releases, and DTS's efforts to encourage RCFD to comply with industry standards. The categories of documents referenced by Mr. Pemberton are as follows:
1.  Written recommendations from DTS to RCFD regarding tank inspections. Mr. Pemberton recalled that DTS sent written correspondence to RCFD's corporate offices in Austin on at least four occasions — in approximately 1997, 2002, 2005, and 2007 — recommending that RCFD conduct API 653-compliant internal inspections of the southern tank farm tanks. These letters would have been signed by the DTS Terminal Manager or Vice President of Operations and would have been addressed to Malcolm Griggs or other RCFD officers. Copies should be in DTS's outgoing correspondence files.
2.  Internal DTS incident reports. DTS prepared internal incident reports for all significant releases at the Site, including the 1996 Tank S-4 release, the 2001 Tank S-7 release, the 2003 Tank N-3 release, the 2008 Tank S-11 release, and the 2014 loading rack release. These reports would document the date, time, cause, volume, and response actions for each release, as well as any regulatory notifications made.
3.  Monthly operations reports. DTS prepared monthly operations reports for the Dunmore Wharton Terminal throughout its operational history (1991–2015). These reports included inventory data for all tanks, both in the northern and southern tank farms. Mr. Pemberton stated that the monthly operations reports for the southern tank farm would show inventory discrepancies during periods of product loss attributable to releases, and could be used to corroborate the timing and approximate volume of the documented releases.
4.  Correspondence between DTS management and RCFD regarding maintenance deficiencies. In addition to the tank inspection recommendation letters referenced above, Mr. Pemberton recalled that DTS management sent other correspondence to RCFD addressing specific maintenance concerns, including secondary containment deficiencies, SPCC plan compliance, and operational practices. This correspondence would have been maintained in DTS's operational files.
5.  DTS's SPCC plans and annual inspection checklists for the northern tank farm. These documents would demonstrate the standard of care that DTS applied to its own operations and would provide a contrast with RCFD's practices in the southern tank farm. The SPCC plans were required to be maintained on site and reviewed regularly under federal regulations.
6.  Photographs of the southern tank farm containment area conditions. Mr. Pemberton recalled that DTS personnel photographed berm erosion and containment deficiencies in the southern tank farm in approximately 2004 and 2007. These photographs, if located, would provide contemporaneous visual documentation of the maintenance deficiencies described by Mr. Pemberton in Section IV of this memorandum.
Mr. Pemberton offered to assist in locating any of the above-referenced documents if provided access to the archived DTS files. He stated that he is familiar with DTS's filing system and record-keeping practices and believes he could help identify relevant files and boxes within the archived records.
X. Witness Availability and Willingness to Testify
Mr. Pemberton confirmed his willingness to serve as a fact witness in potential cost-recovery litigation against Rowan Creek Fuel Distributors, Inc. He stated that he has no reservations about testifying and that he believes it is important for the facts regarding RCFD's operations at the Site to be placed on the record.
Mr. Pemberton confirmed that he has no conflict of interest with any party to the potential litigation. He is not currently, and has not at any point been, employed by RCFD. He has no financial, familial, or personal relationship with any officer, director, or employee of RCFD. His only connection to any party is his prior employment with DTS, a dissolved subsidiary of DEH, which ended in 2015.
Mr. Pemberton indicated that he is generally available for deposition and trial testimony, subject to reasonable scheduling accommodation. He noted that his current part-time consulting work affords him scheduling flexibility, but he requested advance notice of any proceedings — ideally thirty days or more — so that he may arrange time away from his consulting commitments. He also requested that, to the extent practicable, depositions and other proceedings be scheduled in the Houston metropolitan area to minimize travel.
Mr. Pemberton's full contact information, including cellular telephone number, personal email address, and home address, is on file with Devon Archer at Calderwood & Harkness LLP.
XI. Assessment and Recommendations
Credibility. Mr. Pemberton presents as a highly credible and knowledgeable witness. He has twenty-seven years of direct experience at the Site, spanning the entire period of RCFD's operations under the JOA (1991–2010) and continuing through DTS's cessation of operations in 2015. His testimony is detailed, specific, and internally consistent. He was able to provide dates, names, approximate volumes, and descriptions of events that are corroborated by independent sources, including TCEQ incident records and Pinehill's Phase II ESA findings. He was candid in acknowledging DTS's own releases (the 2003 Tank N-3 release and the 2014 loading rack release), which enhances his credibility as a balanced and honest witness. He presented as calm, articulate, and willing to distinguish between matters he observed directly, matters he learned from others, and matters as to which he is uncertain. He did not appear to embellish or speculate beyond his personal knowledge.
Key Value. Mr. Pemberton's testimony is particularly valuable to DEH's cost-recovery claim on three critical points:
1.  Delayed Reporting. Mr. Pemberton's testimony regarding RCFD's failure to timely report the 2001 Tank S-7 release (TCEQ Incident No. 142876, approximately two to three weeks of delay) and the 2008 Tank S-11 release (TCEQ Incident No. 197503, approximately ten days of delay) supports arguments that RCFD's culpability extends beyond the initial releases themselves. The delayed reporting allowed released product to migrate into soil and groundwater, exacerbating the contamination and increasing the scope and cost of the remediation now being undertaken by DEH. This testimony supports both CERCLA liability arguments and potential claims under state law for failure to comply with reporting obligations.
2.  Systematic Resistance to Tank Inspections. Mr. Pemberton's testimony regarding RCFD's persistent refusal to conduct API 653-compliant tank inspections — over a nearly twenty-year period, despite repeated written recommendations from DTS — supports the argument that RCFD's operational negligence contributed directly to the tank bottom failures that caused the 1996 Tank S-4 and 2008 Tank S-11 releases. This testimony is relevant to allocation of response costs under CERCLA § 113(f) and to potential state-law claims for negligence or breach of the JOA.
3.  Secondary Containment Deficiencies. Mr. Pemberton's testimony regarding RCFD's failure to maintain the earthen containment berms around the southern tanks supports the argument that RCFD's negligence facilitated the migration of released product beyond the immediate tank areas and into the surrounding soil and groundwater. The documented breaches and deterioration of the berms around Tanks S-4, S-7, S-9, and S-11 are directly relevant to the lateral extent of contamination documented in the Phase II ESA.
Document Retrieval. Based on Mr. Pemberton's testimony, it is recommended that the engagement team initiate an immediate and targeted search of DTS's archived records, now held by DEH, for the categories of documents identified in Section IX of this memorandum. Priority should be given to locating the written correspondence from DTS to RCFD regarding tank inspections (approximately 1997, 2002, 2005, and 2007), the internal incident reports for the 1996, 2001, 2003, 2008, and 2014 releases, and the photographs of southern tank farm containment conditions (approximately 2004 and 2007). These documents, if located, would provide contemporaneous documentary corroboration of Mr. Pemberton's testimony and would be highly relevant to DEH's cost-recovery claim. The asserted RCFD share of remediation costs is $4.26 million, and the total claimed recovery, including investigative costs, is $4.647 million. Strong documentary corroboration of Mr. Pemberton's testimony would significantly enhance DEH's litigation posture and settlement leverage.
Litigation Hold. The engagement team should confirm that the Litigation Hold Notice dated June 27, 2025, issued to DEH personnel, encompasses all categories of documents referenced by Mr. Pemberton in his testimony, as described in Section IX above. If the current scope of the litigation hold does not specifically identify DTS's archived operational files, outgoing correspondence files, incident reports, monthly operations reports, SPCC plans, inspection checklists, and photographic records, a supplemental litigation hold notice should be issued to DEH immediately, specifically identifying these categories and directing DEH personnel to preserve all such records.
Follow-Up Interview. The engagement team should consider scheduling a follow-up interview with Mr. Pemberton to address any specific questions arising from the document review process and from any additional investigation conducted after this interview. Additionally, if litigation is filed against RCFD in the United States District Court for the Southern District of Texas, Houston Division, Mr. Pemberton should be prepared for deposition through one or more preparation sessions. Given the strength and detail of his testimony, Mr. Pemberton is likely to be one of DEH's most important fact witnesses, and early preparation will be valuable.
XII. Signature block and Distribution
This memorandum was prepared by Devon Archer, Working Associate, Calderwood & Harkness LLP, based on the in-person witness interview conducted on July 2, 2025, and contemporaneous notes taken during that interview.
Prepared by:
________________________________________
Devon Archer Working Associate Calderwood & Harkness LLP 1200 McKinney Street, Suite 4100 Houston, Texas 77010
Date: July 3, 2025
Distribution: This memorandum is distributed to the following individuals only and is not to be distributed, copied, or disclosed to any person outside of the engagement team without the express written authorization of the Responsible Partner:
•  Sandra Tung, Responsible Partner, Calderwood & Harkness LLP
•  Cynthia Ho, Lead Associate, Calderwood & Harkness LLP
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
PREPARED IN ANTICIPATION OF LITIGATION — DO NOT DISTRIBUTE

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1016-00006

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