1006-00003 · Crestline Packaging Solutions LLC · Diligence/Phase II Analysis

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum was prepared at the direction of counsel in anticipation of litigation and in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. Do not distribute, copy, or disclose without authorization from Crestline Packaging Solutions LLC.

FROM: Harrison Caldwell, Of Counsel, Environmental & Land Use Practice Group, Calderwood & Harkness LLP

TO: Beatrice Holloway, Responsible Partner, Calderwood & Harkness LLP Grace Nakamura, Lead Associate, Calderwood & Harkness LLP Derek Huang, General Counsel, Crestline Packaging Solutions LLC Patricia Okonkwo, VP, Environmental Health & Safety, Crestline Packaging Solutions LLC

DATE: October 16, 2022

RE: Vapor Intrusion Risk Assessment — Building C, McKeesport Main Plant, 2200 Iron Works Boulevard, McKeesport, PA 15132 (Allegheny County; Parcel ID 0383-M-00125-0000-00)

MATTER NO.: 1006-00003

TRANSACTION: Proposed Acquisition of Allegheny Chemical Coatings, Inc. ("ACC") by Crestline Packaging Solutions LLC ("Crestline")

I. EXECUTIVE SUMMARY

The purpose of this memorandum is to provide the deal team and Crestline's in-house counsel with a detailed legal and technical analysis of the sub-slab soil gas sampling results for trichloroethylene ("TCE") detected beneath Building C at the McKeesport Main Plant, as part of the Phase II Environmental Site Assessment ("Phase II ESA") conducted by TerraVerde Environmental Consulting LLC ("TerraVerde"). This memorandum addresses the regulatory, health and safety, liability, and transactional implications of this finding for the proposed stock acquisition of ACC by Crestline.

Key Finding. TCE was detected in sub-slab soil gas beneath Building C at a concentration of 42 µg/m³, which exceeds the Pennsylvania Department of Environmental Protection ("PA DEP") vapor intrusion screening level of 21 µg/m³ by 100% — that is, the measured concentration is 2.0 times the applicable screening level. This is a significant finding with direct implications for human health exposure, regulatory compliance, environmental liability allocation, and the structuring of the proposed transaction.

This result confirms an active vapor intrusion pathway from residual subsurface contamination into the occupied Building C workspace, thereby validating the concerns identified as REC-1 (Recognized Environmental Condition No. 1) in TerraVerde's Phase I Environmental Site Assessment dated August 15, 2022 (the "Phase I ESA"). REC-1 flagged elevated volatile organic compound ("VOC") readings in indoor air near the Building C mixing area and identified a potential vapor intrusion pathway from residual subsurface contamination beneath the former underground storage tank ("UST") field.

The exceedance triggers several overlapping concerns that are addressed in detail throughout this memorandum:

• Regulatory Notification Considerations. The vapor intrusion condition may require reopening the 2001 No Further Action ("NFA") letter issued under the PA DEP Act 2 Land Recycling Program, or the initiation of a new Act 2 filing to address the previously unevaluated vapor intrusion pathway.

• Worker Health Exposure Concerns. Although the sub-slab concentrations are far below OSHA Permissible Exposure Limits, they exceed environmental risk-based screening levels designed to protect against chronic, long-term exposure, including cancer risk from TCE — a probable human carcinogen.

• Remedial Obligations. The exceedance will require mitigation, most likely through the installation of a sub-slab depressurization ("SSD") system beneath Building C, and potentially through broader groundwater treatment to address the underlying source of contamination.

• Transaction Structuring Implications. The vapor intrusion finding materially affects the environmental risk allocation in the proposed stock acquisition, strengthening Crestline's negotiating position for expanded escrow, uncapped environmental indemnity, and pre-closing remediation covenants.

Recommended Mitigation. The primary recommended mitigation measure is the installation of an SSD system beneath Building C. The estimated cost of the SSD system is $75,000–$150,000 for design, installation, and commissioning, with annual operation and maintenance costs of approximately $5,000–$10,000 per year. These costs are incorporated within TerraVerde's preliminary remediation cost estimate of $1.2M–$2.8M (dated October 18, 2022), which covers both groundwater treatment and vapor mitigation at the McKeesport facility.

This memorandum should be read in conjunction with the Phase II Results Analysis Memorandum — McKeesport (dated October 14, 2022), which addresses the full range of Phase II analytical findings across all media (soil, groundwater, and soil gas) at the McKeesport Main Plant. The two memoranda together form the core of the environmental diligence analysis for the McKeesport facility and will feed into the Comprehensive Environmental Diligence Summary Memorandum currently in preparation.

II. BACKGROUND

A. Property and Facility Description

The McKeesport Main Plant serves as the operational headquarters of Allegheny Chemical Coatings, Inc. ("ACC") and is located at 2200 Iron Works Boulevard, McKeesport, Pennsylvania 15132, in Allegheny County. The property encompasses approximately 14.3 acres and contains approximately 185,000 square feet of manufacturing space and 12,000 square feet of office and administrative space. The property is identified by Allegheny County Parcel ID 0383-M-00125-0000-00 and is owned in fee simple by ACC, which has held title to the property since 1987.

The McKeesport Main Plant is the largest of ACC's four operating facilities and is the primary location for the formulation, blending, and packaging of ACC's industrial coating product lines. The manufacturing campus is organized into several distinct structures, identified as Buildings A through E in the Phase I ESA and Phase II ESA reports. Each building serves a specialized function within ACC's production process.

Building C is the structure at the center of the vapor intrusion concern addressed in this memorandum. Building C is a single-story manufacturing structure within the main plant complex that houses the mixing and blending area for ACC's solvent-based and epoxy coating production lines. This is the area where raw chemical ingredients — including volatile organic compounds — are combined, heated, and processed to produce ACC's coating formulations. The chemicals routinely used in Building C operations include, among others, toluene, xylene, methyl ethyl ketone ("MEK"), and ethylbenzene, all of which are volatile organic compounds with varying degrees of toxicity and regulatory significance.

Building C is of particular environmental significance because it was constructed over, or in immediate proximity to, the former underground storage tank ("UST") field that was the subject of the 1993 tank removal and subsequent Act 2 remediation. The spatial relationship between Building C's concrete floor slab and the former UST locations creates a direct physical pathway by which volatile contaminants in the subsurface beneath the former UST field could migrate upward through the slab and into the occupied workspace — the mechanism known as vapor intrusion.

The building is a conventional industrial structure with a poured concrete slab-on-grade foundation. As is typical for manufacturing buildings of this vintage and type, the slab is not vapor-sealed and likely contains cracks, construction joints, and utility penetrations (for plumbing, electrical conduits, and drainage) that can serve as preferential pathways for vapor migration. The building's HVAC system includes mechanical ventilation consistent with industrial manufacturing operations, but the extent to which the HVAC system creates positive or negative pressure relative to the sub-slab environment has not yet been characterized.

B. Environmental History Relevant to Vapor Intrusion

An understanding of the property's environmental history is essential to interpreting the significance of the TCE detection in sub-slab soil gas and to evaluating the regulatory and liability implications.

Prior Ownership and Operations. Prior to ACC's acquisition of the McKeesport property in 1987, the site was operated as a steel fabrication facility by Keystone Metalworks, a company that is now defunct. Keystone Metalworks is believed to have operated at the site from approximately the mid-1950s through the mid-1980s, during which time the facility engaged in steel cutting, welding, machining, and metal finishing operations. Steel fabrication operations of this era commonly involved the use of chlorinated solvents — including TCE and tetrachloroethylene ("PCE") — for metal degreasing and parts cleaning. The use of such solvents frequently resulted in subsurface contamination through spills, disposal practices, and leaks from storage vessels, a pattern well-documented across the industrial landscape of the Monongahela River Valley and the broader Pittsburgh metropolitan area.

UST Removal (1993). In 1993, ACC removed three underground storage tanks, each with a capacity of 10,000 gallons, from the former UST field located beneath or immediately adjacent to Building C. The tanks are understood to have stored petroleum products (fuel oil and/or solvents) during the Keystone Metalworks era and potentially during early ACC operations. Confirmation soil sampling conducted during the tank removal identified petroleum hydrocarbon contamination in the soils surrounding the former tank excavations.

Act 2 Filing and NFA Letter (1994–2001). Following the UST removal, ACC initiated a cleanup of the contaminated soils under the PA DEP Act 2 Land Recycling Program. A Notice of Intent to Remediate was filed in 1994, and remediation activities were conducted under the Statewide Health Standard ("SHS") pathway. After completion of the soil remediation, PA DEP issued a No Further Action ("NFA") letter in May 2001, confirming that the soils at the former UST locations met the applicable Statewide Health Standards.

Critically, the NFA letter addressed soil contamination only. Groundwater conditions in the vicinity of the former UST field were not fully characterized at the time of the Act 2 investigation, and the NFA does not appear to extend to groundwater. Moreover, the 2001 NFA predates the development of PA DEP's current vapor intrusion guidance, and the vapor intrusion pathway was not evaluated as part of the Act 2 investigation. As a result, the NFA letter, while providing a measure of regulatory closure for soil contamination, does not provide protection against liability related to the vapor intrusion pathway or to groundwater contamination in the vicinity of the former UST field.

Phase I ESA Findings (August 2022). The NFA letter was identified as a Historical Recognized Environmental Condition ("HREC-1") in TerraVerde's Phase I ESA dated August 15, 2022. While the soil remediation appeared to have been successfully completed, TerraVerde noted that the NFA's limited scope (soils only, under the Statewide Health Standard) left open the possibility of unaddressed subsurface conditions.

Of greater immediate significance, TerraVerde identified REC-1 in the Phase I ESA: elevated VOC readings in indoor air near the Building C mixing area, with a potential vapor intrusion pathway from residual subsurface contamination beneath the former UST field. This REC was based on a combination of factors, including the documented history of UST releases, the building's proximity to the former UST field, the age and construction type of the Building C slab, and anecdotal reports from ACC personnel of occasional solvent-like odors in the Building C workspace that were not attributable to current manufacturing operations. REC-1 was the primary driver for the inclusion of sub-slab soil gas sampling in the Phase II ESA scope.

C. Phase II Investigation — Vapor Intrusion Component

The Phase II ESA at the McKeesport Main Plant commenced on September 12, 2022, with field activities including soil borings, monitoring well installation, groundwater sampling, and sub-slab soil gas sampling completed by September 26, 2022. The investigation was conducted by TerraVerde under the field leadership of Alicia Reyes, P.G. (Licensed Professional Geologist, Commonwealth of Pennsylvania), with project management by Kevin O'Malley, P.G., and under the overall direction of Dr. Nina Sorensen, P.E., CHMM (principal-in-charge).

Calderwood & Harkness's involvement in shaping the Phase II scope of work was integral to ensuring that the investigation adequately addressed the environmental concerns identified in the Phase I ESA. Pursuant to Calderwood & Harkness's Phase II Scope of Work Review & Comment Letter (dated approximately September 1, 2022), TerraVerde was directed to add sub-slab soil gas sampling points beneath Building C to the Phase II scope. This addition was specifically designed to evaluate the vapor intrusion pathway identified in REC-1 of the Phase I ESA. Without this addition, the Phase II would have addressed soil and groundwater conditions but would not have directly evaluated the vapor migration pathway into Building C — a gap that could have left a critical risk uncharacterized prior to deal closing.

Sub-Slab Soil Gas Sampling Methodology. Sub-slab soil gas samples were collected using Summa canisters — evacuated, passivated stainless-steel canisters designed for the collection of whole-air samples for VOC analysis. The canisters were installed at multiple sampling points beneath the Building C concrete slab, accessed through small-diameter holes drilled through the slab at locations selected to provide representative coverage of the building footprint, with particular emphasis on areas above and adjacent to the former UST locations. The sampling points were installed with temporary vapor pins and sealed to prevent ambient air infiltration, following protocols consistent with PA DEP Technical Guidance Document No. 261-0300-101 and EPA guidance for sub-slab soil gas sampling.

Laboratory Analysis. The collected samples were analyzed by Keystone Analytical Laboratories Inc. (Monroeville, Pennsylvania), a Pennsylvania-accredited environmental laboratory, using EPA Method TO-15 — the standard analytical method for the determination of volatile organic compounds in air samples collected in Summa canisters. Method TO-15 provides compound-specific identification and quantification of a broad suite of VOCs, including both chlorinated solvents (TCE, PCE, vinyl chloride, etc.) and petroleum-related compounds (BTEX — benzene, toluene, ethylbenzene, and xylenes).

Receipt of Analytical Results. The analytical results from Keystone Analytical Laboratories were received by TerraVerde on October 10, 2022, and were transmitted to Calderwood & Harkness on October 12, 2022. This memorandum is based on those results, as well as the broader Phase II analytical dataset discussed in the companion Phase II Results Analysis Memorandum dated October 14, 2022.

III. SUB-SLAB SOIL GAS ANALYTICAL RESULTS

A. TCE Detection

The most significant analytical finding from the sub-slab soil gas sampling beneath Building C is the detection of trichloroethylene ("TCE") at a concentration of 42 µg/m³ (micrograms per cubic meter).

The applicable PA DEP vapor intrusion screening level for TCE in sub-slab soil gas is 21 µg/m³, established under PA DEP Technical Guidance Document No. 261-0300-101 for the commercial/industrial use scenario. The measured concentration therefore exceeds the screening level by a factor of 2.0, representing a 100% exceedance of the applicable standard:

42 µg/m³ ÷ 21 µg/m³ = 2.0x (100% exceedance)

TCE is a chlorinated volatile organic compound that has been the subject of extensive toxicological evaluation by EPA and other regulatory agencies. TCE is classified as a probable human carcinogen (EPA Group B1 classification under the 1999 guidelines; reclassified as "carcinogenic to humans" for kidney cancer and "likely to be carcinogenic to humans" for liver cancer and non-Hodgkin lymphoma per EPA's 2011 Integrated Risk Information System ("IRIS") toxicological assessment). TCE exposure is associated with a range of adverse health effects, including kidney cancer, liver toxicity, immunotoxicity, and developmental toxicity. The 2011 IRIS assessment substantially strengthened the scientific basis for TCE's carcinogenicity and lowered the reference values used to derive risk-based screening levels, which is the basis for the current PA DEP screening level.

The presence of TCE in sub-slab soil gas beneath Building C is particularly noteworthy because TCE is not a chemical currently used in ACC's coating manufacturing operations. ACC's formulation processes at the McKeesport facility employ toluene, xylene, MEK, and ethylbenzene as primary solvent components; chlorinated solvents such as TCE and PCE are not part of the current product line. The detection of TCE in the subsurface beneath Building C therefore strongly suggests a legacy source — most likely from the former steel fabrication operations conducted by Keystone Metalworks during the pre-1987 period, when chlorinated solvents were routinely used for metal degreasing, parts cleaning, and surface preparation. This attribution is consistent with well-documented patterns of chlorinated solvent contamination at former metalworking and steel fabrication facilities throughout the Monongahela Valley and the greater Pittsburgh region.

B. Other VOC Detections in Sub-Slab Soil Gas

While the TCE detection is the primary focus of this memorandum, it is important to consider the TCE finding in the context of the broader Phase II analytical results, which are discussed in detail in the companion Phase II Results Analysis Memorandum dated October 14, 2022. The following additional contaminant detections from the Phase II are relevant to the vapor intrusion analysis:

• Toluene in groundwater at monitoring well MW-3: Detected at 1,420 µg/L, which exceeds the PA DEP Act 2 Statewide Health Standard of 1,000 µg/L — a 42% exceedance above the applicable standard. MW-3 is located in the vicinity of the former UST field and Building C.

• Xylene in groundwater at MW-3: Detected at 8,200 µg/L, which is below the PA DEP Act 2 Statewide Health Standard of 10,000 µg/L. While this result does not represent an exceedance, the concentration is elevated and indicates significant dissolved-phase contamination in the groundwater beneath the Building C area.

• PCE (tetrachloroethylene) in soil at boring SB-7: Detected at 3.8 mg/kg. This concentration exceeds the PA DEP residential direct contact standard of 2.4 mg/kg but is below the non-residential direct contact standard of 14 mg/kg. The presence of PCE is significant because PCE is a parent compound that undergoes reductive dechlorination under anaerobic groundwater conditions to produce TCE as a degradation product — a relationship discussed further in Section VI below.

These co-located contaminants in groundwater and soil support the interpretation that subsurface contamination is the source of the vapor intrusion pathway, rather than ambient or operational indoor air contributions from current Building C manufacturing operations. The presence of both petroleum-related compounds (toluene, xylene) and chlorinated solvents (TCE, PCE) is consistent with a mixed-contaminant plume originating from the former UST field and associated historical operations.

C. Significance of Exceedance

The 100% exceedance of the PA DEP screening level for TCE in sub-slab soil gas is a finding of considerable regulatory and practical significance. Several aspects of this significance merit emphasis:

First, the exceedance confirms that the sub-slab soil gas concentrations of TCE beneath Building C are sufficient to pose a potential vapor intrusion risk to indoor air quality. Sub-slab soil gas screening levels are established as conservative threshold values: when concentrations in the sub-slab environment exceed the screening level, it is assumed — absent site-specific data demonstrating otherwise — that indoor air concentrations may also exceed acceptable risk thresholds. The 2.0x exceedance is not a marginal result that might be attributed to analytical variability or sampling artifact; it represents a clear and unambiguous exceedance of the applicable standard.

Second, under PA DEP guidance (Technical Guidance Document No. 261-0300-101), when a vapor intrusion screening level is exceeded, the responsible party is expected to take one of two courses of action: (a) direct mitigation of the vapor intrusion pathway (i.e., installation of an SSD system or equivalent engineering control), or (b) further investigation, including indoor air sampling, building-specific modeling, or multi-seasonal monitoring, to determine whether the screening level exceedance actually translates to unacceptable indoor air concentrations. As discussed in Section VII of this memorandum, we recommend that Crestline pursue both direct mitigation (as a pre-closing covenant or condition to closing) and further investigation (to fully characterize the exposure pathway and support long-term remediation planning).

Third, the detection level indicates an active and ongoing migration pathway from subsurface contamination to the building interior. The fact that TCE — a compound not used in current operations — is present in the sub-slab environment at concentrations exceeding screening levels demonstrates that volatile contaminants are actively migrating from the subsurface through the unsaturated zone and accumulating beneath the Building C slab. This is not a historical or static condition; it represents a continuing release and exposure pathway that will persist unless and until the source is remediated or the pathway is interrupted through engineering controls.

IV. REGULATORY FRAMEWORK — PA DEP VAPOR INTRUSION GUIDANCE

A. PA DEP Land Recycling Program (Act 2) and Vapor Intrusion

The regulatory framework governing the evaluation and remediation of vapor intrusion conditions at contaminated sites in Pennsylvania is anchored in the Pennsylvania Land Recycling and Environmental Remediation Standards Act, commonly known as Act 2 (35 P.S. §§ 6026.101–6026.908). Act 2 establishes three alternative cleanup standards — the Statewide Health Standard, the Site-Specific Standard, and the Background Standard — and provides a process for voluntary cleanup of contaminated properties, culminating in the issuance of a relief-from-liability letter (commonly referred to as an NFA letter) upon demonstration that the applicable standard has been achieved.

PA DEP's specific guidance on vapor intrusion is set forth in Technical Guidance Document No. 261-0300-101, titled "Land Recycling Program Technical Guidance Manual — Section IV.A.4, Vapor Intrusion." This guidance document provides the framework for evaluating vapor intrusion at Act 2 sites and establishes the methodology for determining whether a vapor intrusion pathway poses a risk to human health at a given site. The guidance addresses the following key elements:

• Screening levels for sub-slab soil gas, near-slab soil gas (exterior), and indoor air for a comprehensive list of volatile organic compounds, including TCE, PCE, benzene, vinyl chloride, and others.

• Decision framework for determining when vapor intrusion investigation is warranted, what sampling protocols should be followed, and what actions should be taken when screening levels are exceeded.

• Mitigation requirements and acceptable engineering controls for addressing confirmed or potential vapor intrusion conditions, including sub-slab depressurization systems, sub-membrane depressurization systems, and building ventilation modifications.

• Long-term monitoring requirements for sites where vapor intrusion mitigation systems are installed or where ongoing monitoring is being used to demonstrate that indoor air quality is protective of human health.

Under the Act 2 framework, vapor intrusion is treated as a potential exposure pathway that must be evaluated whenever volatile contaminants are present in subsurface soil, soil gas, or groundwater at concentrations that could result in migration of vapors into overlying or adjacent buildings. The vapor intrusion pathway was not routinely evaluated at Act 2 sites prior to the development of modern vapor intrusion guidance (the first comprehensive EPA vapor intrusion guidance was issued in 2002, and PA DEP's guidance has evolved since that time), which is why the 2001 NFA for the McKeesport property did not address this pathway.

B. Applicable Screening Levels and Standards

The TCE sub-slab soil gas screening level of 21 µg/m³ is applicable to both commercial/industrial and residential use scenarios under the current PA DEP guidance. This screening level is derived from the following toxicological parameters and risk assumptions:

• Toxicity values: The screening level is based on EPA's 2012 IRIS toxicity values for TCE, which reflect the comprehensive toxicological reassessment published in September 2011. The key toxicity values include an inhalation unit risk factor for carcinogenicity and a reference concentration ("RfC") for non-cancer effects (hepatotoxicity, immunotoxicity, and developmental toxicity).

• Target risk levels: The screening level incorporates a target cancer risk of 1 × 10⁻⁵ (one excess cancer case per 100,000 exposed individuals over a lifetime) and a non-cancer hazard quotient of 1.0 — meaning that at the screening level concentration, non-cancer health effects are not expected to occur even with chronic exposure.

• Exposure assumptions: The screening level accounts for standard residential or commercial/industrial exposure durations, frequencies, and attenuation factors between sub-slab soil gas and indoor air.

The measured concentration of 42 µg/m³ exceeds both the residential and non-residential screening levels. This is significant because even under the less-restrictive commercial/industrial exposure scenario (shorter assumed exposure duration, fewer days per year), the concentration remains above the screening threshold.

Under the Statewide Health Standard ("SHS") pathway — the cleanup standard applied to the 2001 NFA — the vapor intrusion screening level exceedance would need to be addressed before a release could be considered fully remediated. The SHS pathway applies generic, statewide screening levels without site-specific adjustment, meaning that the 21 µg/m³ threshold is a bright-line standard that must be met.

Alternatively, under the Site-Specific Standard ("SSS") pathway, a site-specific risk assessment could potentially support screening levels higher than the generic SHS values. However, pursuit of the SSS pathway would require substantial additional data collection (including indoor air sampling, exposure modeling, and potentially biomonitoring), preparation and submission of a risk assessment report to PA DEP, and review and approval by the Department — a process that typically requires 12–24 months and significant consulting expense. The SSS pathway may be appropriate as a long-term strategy but does not provide near-term resolution for transaction purposes.

C. Notification and Reporting Obligations

The regulatory notification and reporting obligations arising from the TCE vapor intrusion finding are a critical consideration for both ACC (as the current property owner and responsible party) and for Crestline (as the prospective purchaser that would assume ACC's regulatory obligations in a stock transaction).

Act 2 Filing. If the McKeesport site is to be brought into (or returned to) the Act 2 cleanup process to address the vapor intrusion condition, PA DEP must be notified. This could take the form of either (a) reopening the existing 2001 NFA to address the previously unevaluated vapor intrusion pathway, or (b) initiating a new Act 2 filing for the vapor intrusion condition as a newly discovered release or migration pathway.

The existing NFA letter (May 2001) addressed soils only under the Statewide Health Standard. The NFA does not mention vapor intrusion, does not address groundwater conditions, and does not purport to provide closure for any environmental condition other than the soil contamination associated with the 1993 UST removal. Accordingly, the NFA may not provide any protection against regulatory liability or enforcement action related to the vapor intrusion pathway.

Under PA DEP regulations and guidance, a responsible party is obligated to address newly discovered releases or migration pathways, even at sites that have received prior NFA letters, if conditions have materially changed or if the original investigation did not address the pathway in question. The discovery of TCE at concentrations exceeding the vapor intrusion screening level in sub-slab soil gas beneath Building C — a pathway not evaluated at the time of the 2001 NFA — appears to constitute a "changed condition" or newly identified exposure pathway sufficient to warrant reopening the 2001 NFA or initiating a new filing.

This conclusion is supported by several factors:

(i) The 2001 NFA was issued for soils only and expressly did not address groundwater or vapor intrusion;

(ii) The vapor intrusion pathway was not evaluated because modern vapor intrusion guidance did not exist at the time of the original investigation;

(iii) The contaminant identified (TCE) is a chlorinated solvent that may not have been included in the original analytical suite if the investigation was focused solely on petroleum hydrocarbons from the USTs;

(iv) PA DEP has a strong policy interest in ensuring that NFA letters do not serve as barriers to addressing subsequently identified exposure pathways that pose a risk to human health.

Proactive vs. Reactive Engagement. There is a strategic question regarding whether proactive engagement with PA DEP — prior to closing — would be advisable. Proactive engagement could allow Crestline to establish a remediation framework and timeline with PA DEP's input, potentially avoiding the uncertainties and costs associated with a post-closing regulatory surprise. On the other hand, proactive engagement prior to the deal closing could trigger regulatory scrutiny that complicates the transaction timeline. This strategic question is addressed further in Section IX below.

V. OSHA WORKPLACE EXPOSURE STANDARDS

A. Occupational Exposure Limits for TCE

In addition to the environmental regulatory framework discussed in Section IV, workplace exposure to TCE is regulated under the Occupational Safety and Health Act through standards promulgated by the Occupational Safety and Health Administration ("OSHA"). Although the environmental and occupational frameworks serve different protective purposes and apply different exposure assumptions, both are relevant to evaluating the implications of the Building C vapor intrusion finding.

The applicable occupational exposure limits for TCE are as follows:

It bears noting that the OSHA PEL for TCE (100 ppm) was established in 1971 and has not been updated to reflect current toxicological understanding. The American Conference of Governmental Industrial Hygienists ("ACGIH") Threshold Limit Value of 10 ppm and the National Institute for Occupational Safety and Health ("NIOSH") Recommended Exposure Limit of 2 ppm are both more protective and more reflective of current science. NIOSH considers TCE a potential occupational carcinogen and recommends minimizing workplace exposure to the lowest feasible level.

B. Comparison of Sub-Slab Results to Occupational Limits

The sub-slab soil gas concentration of 42 µg/m³ is orders of magnitude below the OSHA PEL (~537,000 µg/m³), the ACGIH TLV (~53,700 µg/m³), and the NIOSH REL (~10,740 µg/m³). On its face, this comparison might suggest that the vapor intrusion finding does not present a meaningful occupational health concern.

However, this comparison must be understood with two important qualifications:

First, sub-slab soil gas concentrations are not directly translatable to indoor air concentrations. Indoor air levels of TCE resulting from vapor intrusion are typically attenuated by a factor of approximately 10x to 100x relative to sub-slab concentrations — meaning that actual indoor air concentrations are expected to be significantly lower than the sub-slab measurement. However, this attenuation factor is highly variable and depends on a range of building-specific factors, including:

• Integrity and thickness of the concrete slab

• Presence and extent of cracks, joints, and utility penetrations

• HVAC system operation and building pressure dynamics

• Temperature differentials between indoor and sub-slab environments

• Season and weather conditions at the time of measurement

Without indoor air sampling data (which has not yet been collected), it is not possible to determine the actual indoor air TCE concentration with certainty. If the attenuation factor is at the lower end of the expected range (i.e., less attenuation), indoor air concentrations could be higher than predicted; if at the upper end, indoor air concentrations may be negligible.

Second, the PA DEP screening levels and OSHA occupational limits serve fundamentally different protective purposes. OSHA standards are designed to protect against acute and subchronic workplace exposure — they set limits intended to prevent immediate or short-term health effects in healthy adult workers exposed during an 8- or 10-hour workday. In contrast, PA DEP vapor intrusion screening levels are designed to protect against long-term chronic exposure, including the incremental cancer risk associated with continuous, low-level exposure over a period of years to decades. The screening levels are set at concentrations many orders of magnitude lower than occupational limits precisely because they account for lifetime exposure durations and are designed to protect the general population, including sensitive subpopulations (children, the elderly, immunocompromised individuals) who may not be present in a workplace setting but whose risk is nonetheless relevant under environmental regulatory frameworks.

Both sets of standards are relevant to the Building C situation, but they serve complementary rather than overlapping functions. The fact that the sub-slab concentration is below OSHA limits does not eliminate the environmental and chronic health risk concern; likewise, the PA DEP screening level exceedance does not necessarily indicate that an imminent OSHA violation exists.

C. Potential Worker Health Risk Assessment

Building C houses manufacturing operations with active worker occupancy during multiple shifts, including day, swing, and potentially overnight shifts depending on production demands. Workers in Building C are engaged in mixing, blending, and quality control activities that involve direct handling of volatile solvents (toluene, xylene, MEK, ethylbenzene), for which ACC presumably maintains industrial hygiene monitoring and personal protective equipment ("PPE") programs.

Even though the sub-slab TCE concentrations are below OSHA occupational limits, the PA DEP screening level exceedance indicates a potential chronic health risk to workers exposed over long durations — particularly workers who spend the majority of their working hours in Building C over periods of years or decades. The lifetime incremental cancer risk associated with TCE exposure at or near the screening level is on the order of 1 × 10⁻⁵ (one excess cancer case per 100,000 individuals), which is within the range that EPA and PA DEP consider to be at the boundary of acceptability for environmental exposure scenarios.

Several practical steps are warranted in light of this finding:

• ACC's EHS Manager, Carl Johannsen, should be consulted regarding any existing indoor air monitoring data for Building C, the configuration and operating parameters of the building's HVAC system, and any worker exposure assessments or industrial hygiene surveys that have been conducted in connection with ACC's use of volatile solvents in the mixing and blending operations. This information is critical both for assessing actual worker exposure and for distinguishing between TCE contributions from vapor intrusion and VOC contributions from current manufacturing operations.

• Crestline's VP, Environmental Health & Safety, Patricia Okonkwo, should evaluate whether post-closing industrial hygiene monitoring specifically targeting TCE in indoor air would be appropriate, independent of the environmental regulatory obligations discussed in Section IV. Such monitoring would serve both as a worker protection measure and as a risk management tool to document exposure levels and demonstrate due diligence in protecting worker health.

• A further complication is that workers in Building C are already exposed to ambient VOCs from the coating manufacturing process. The TCE vapor intrusion adds a contaminant to the indoor air that is not associated with current operations, creating a mixed-exposure scenario that complicates attribution. If a worker were to develop a health condition associated with VOC exposure, the question of whether the condition was caused by occupational solvent exposure, TCE vapor intrusion, or some combination of both would be difficult to resolve — a factor that could complicate both workers' compensation and tort liability analyses.

VI. SOURCE ASSESSMENT AND CONTAMINATION PATHWAY ANALYSIS

A. Likely Source of TCE

As noted in Section III.A, TCE is not currently used in ACC's manufacturing operations at the McKeesport facility. Identifying the source of the TCE detected in sub-slab soil gas is important both for understanding the nature and extent of the contamination and for allocating liability in the proposed transaction.

The most likely source of the TCE is historical use of chlorinated solvents during the Keystone Metalworks era (pre-1987). Steel fabrication and metalworking operations during the 1960s through the 1980s commonly involved the use of chlorinated solvents — including TCE, PCE, and 1,1,1-trichloroethane — for metal degreasing, vapor degreasing, parts cleaning, and surface preparation prior to painting or coating. These solvents were typically stored in drums, tanks, or vapor degreasers, and releases to the subsurface occurred through spills, leaks, overfills, and improper disposal practices. The resulting contamination is pervasive at former metalworking sites throughout the industrialized regions of Pennsylvania and the broader Rust Belt.

The former UST field — consisting of three 10,000-gallon tanks removed in 1993 — is located beneath or immediately adjacent to Building C. While the USTs are understood to have stored petroleum products, it is entirely possible that chlorinated solvents were also stored, handled, or disposed of in the vicinity of the UST field during the Keystone Metalworks operations. Moreover, the soil contamination identified during the 1993 tank removal and subsequent Act 2 investigation was likely characterized using analytical methods focused on petroleum hydrocarbons (e.g., total petroleum hydrocarbons, BTEX compounds), and the investigation may not have included analysis for chlorinated solvents such as TCE and PCE. If this is the case, the chlorinated solvent contamination could have been present in the subsurface at the time of the 2001 NFA but was simply not detected because it was not tested for.

The detection of TCE in sub-slab soil gas, combined with the detection of toluene at 1,420 µg/L in groundwater at MW-3 (42% above the Statewide Health Standard), suggests a mixed-contaminant plume with both petroleum and chlorinated solvent components. This is a common contaminant profile at sites with a history of diverse industrial operations and is consistent with the property's use history as both a steel fabrication facility and a chemical coating manufacturing plant.

B. Vapor Intrusion Pathway

The vapor intrusion pathway at Building C can be described as a four-step process:

Step 1: Source. TCE is present in the subsurface beneath Building C, either as residual contamination in soil (non-aqueous phase liquid or NAPL, or sorbed to soil particles) or as dissolved-phase contamination in groundwater. The source zone is located in the vicinity of the former UST field.

Step 2: Volatilization. TCE, being a volatile organic compound with a high vapor pressure and low boiling point, volatilizes from the soil or groundwater source into the soil gas (the air-filled pore spaces within the unsaturated zone above the water table).

Step 3: Migration. TCE vapors migrate upward through the soil gas via diffusion and advection, driven by concentration gradients and pressure differentials, until they accumulate in the zone immediately beneath the Building C concrete floor slab.

Step 4: Entry. TCE vapors enter the Building C interior through pathways of least resistance in the concrete slab, including cracks, construction joints (expansion joints, control joints), utility penetrations (plumbing, electrical conduits, floor drains), and any other openings in the slab that allow communication between the sub-slab environment and the indoor air space.

Several aspects of this pathway remain uncharacterized at the current stage of investigation:

• Sub-slab depressurization field testing and building pressure differential measurements (e.g., blower door testing or pressure transducer monitoring) were not performed during the Phase II investigation. These measurements would further characterize the physical dynamics of the vapor intrusion pathway, including whether the building's HVAC system creates negative pressure (which would enhance vapor intrusion) or positive pressure (which would reduce vapor intrusion) relative to the sub-slab environment.

• Seasonal variation in vapor intrusion is well-documented in the scientific literature and in PA DEP guidance. Vapor intrusion rates tend to be higher during heating season (when buildings are typically depressurized due to the "stack effect" and windows and doors are closed) and lower during cooling season (when buildings may be ventilated and pressure dynamics are different). The September 2022 sampling represents a single data point collected during the transitional period between cooling and heating seasons, and concentrations may vary significantly across seasons. A single exceedance is sufficient to trigger further action under PA DEP guidance, but multi-seasonal data will be necessary to characterize the full range of exposure.

• Indoor air sampling has not been performed. The sub-slab soil gas concentration of 42 µg/m³ is a measurement of the TCE concentration in the air beneath the building slab, not in the occupied space itself. Actual indoor air concentrations depend on the attenuation achieved by the slab and building envelope, HVAC dilution, and other factors. Indoor air sampling is essential to confirm actual exposure levels and should be conducted as described in Section VII.C.

C. Relationship to Other Phase II Findings

The TCE vapor intrusion finding does not exist in isolation; it is part of a broader pattern of subsurface contamination at the McKeesport facility that is documented in the companion Phase II Results Analysis Memorandum dated October 14, 2022. The key relationships are as follows:

Toluene in Groundwater at MW-3. The toluene exceedance at monitoring well MW-3 (1,420 µg/L, 42% above the Statewide Health Standard of 1,000 µg/L) is located in the same area as the Building C sub-slab sampling points. The co-location of toluene in groundwater and TCE in sub-slab soil gas supports the interpretation of a common subsurface source zone in the vicinity of the former UST field, with both petroleum and chlorinated solvent contamination contributing to the overall contamination profile.

PCE in Soil at SB-7. PCE was detected in soil at boring SB-7 at a concentration of 3.8 mg/kg, exceeding the residential direct contact standard (2.4 mg/kg) but below the non-residential standard (14 mg/kg). The presence of PCE is significant in the context of the TCE finding because PCE is a parent compound of TCE in the reductive dechlorination degradation sequence. Under anaerobic groundwater conditions (which are common in the alluvial and fill materials typical of the Monongahela River Valley), PCE undergoes sequential reductive dechlorination:

PCE → TCE → cis-1,2-DCE → vinyl chloride → ethene

The detection of both PCE in soil and TCE in sub-slab soil gas is consistent with a PCE/TCE degradation sequence that reflects historical chlorinated solvent use and ongoing natural attenuation processes in the subsurface. This degradation pathway is well-established in the environmental science literature and is a hallmark of sites with historical chlorinated solvent contamination. The potential for generation of vinyl chloride — a known human carcinogen with even lower screening levels than TCE — as a further degradation product of TCE should be evaluated as part of any expanded investigation.

Lead in Soil at SB-14. Lead was detected in soil at boring SB-14 at a concentration of 680 mg/kg, exceeding the residential standard of 450 mg/kg but below the non-residential standard of 1,000 mg/kg. The lead detection is located in a different area of the property and is not directly related to the vapor intrusion pathway. Lead is a non-volatile contaminant that does not contribute to vapor intrusion. However, the lead detection is relevant to the overall environmental liability assessment for the McKeesport facility and is addressed in the companion Phase II Results Analysis Memorandum.

VII. RECOMMENDED MITIGATION MEASURES

A. Sub-Slab Depressurization System (SSD)

The primary recommended mitigation measure for the Building C vapor intrusion condition is the installation of a sub-slab depressurization ("SSD") system beneath Building C. SSD systems are the most widely used and technically proven engineering control for vapor intrusion mitigation in both residential and commercial/industrial settings, and they are recognized by both PA DEP and EPA as a presumptive remedy for confirmed or suspected vapor intrusion conditions.

How SSD Systems Work. An SSD system creates a negative pressure field (vacuum) beneath the building floor slab, reversing the natural pressure gradient that drives soil gas (and associated VOC vapors) upward through the slab and into indoor air. By maintaining sub-slab pressure slightly below the indoor air pressure, the system ensures that air flows from the building interior downward through slab cracks and penetrations, rather than soil gas flowing upward into the building. The extracted soil gas is collected, conveyed through piping to a blower unit, and exhausted to the atmosphere above the building roofline, where it disperses to concentrations far below any applicable ambient air standards.

System Components. A typical SSD system for a commercial/industrial building consists of the following components:

• Extraction points: Small-diameter (typically 2–4 inch) holes drilled through the concrete slab at strategic locations, connected to sub-slab vapor extraction risers. The number and spacing of extraction points depends on the building footprint, slab characteristics, and sub-slab soil permeability. For a building the size of Building C (~185,000 SF), multiple extraction points would be required to achieve adequate pressure field coverage.

• Horizontal piping network: PVC or HDPE piping connecting the extraction points to a central header and conveying the extracted soil gas to the blower unit.

• Blower/fan unit(s): Electrically powered blower or fan unit(s) that create the negative pressure field. Blower sizing depends on the required airflow rate and pressure differential. Blower units are typically installed on the building exterior or rooftop.

• Exhaust stack: Vertical exhaust stack discharging extracted soil gas above the building roofline, with appropriate separation from air intake vents and occupied areas.

• Monitoring points: Sub-slab pressure monitoring points installed at locations between extraction points to verify that the pressure field extends across the full building footprint. These monitoring points are checked periodically to confirm system performance.

• Slab sealing: Sealing of visible cracks, joints, and utility penetrations in the building slab to minimize air short-circuiting and improve system efficiency.

Effectiveness. SSD systems have a well-established track record of performance. When properly designed, installed, and maintained, SSD systems typically achieve 90–99% reduction in sub-slab vapor concentrations entering the building. This level of performance is generally sufficient to reduce indoor air concentrations to well below applicable screening levels, even in cases where sub-slab concentrations significantly exceed standards.

Ongoing Monitoring and Maintenance. SSD systems are active engineering controls that require ongoing operation, monitoring, and maintenance. Standard practice includes quarterly vacuum/pressure readings at monitoring points to verify that the negative pressure field is maintained across the building footprint, annual indoor air confirmation sampling to verify that the system is achieving the desired reduction in indoor air concentrations, and periodic inspection and maintenance of blower units, piping, and electrical components. These monitoring and maintenance activities are routine and relatively low-cost, but they represent an ongoing operational obligation that will persist for as long as the vapor intrusion source remains in the subsurface.

B. Estimated Costs

TerraVerde has provided the following preliminary cost estimates for SSD system installation and operation at Building C:

The range reflects uncertainty regarding sub-slab soil conditions (permeability, fill material characteristics), the number of extraction points required to achieve adequate pressure field coverage across the full building footprint, and the extent of slab sealing needed. Detailed system design, including diagnostic testing (communication testing, pilot testing) to optimize extraction point placement and blower sizing, would be required before a more refined cost estimate can be developed.

These SSD costs are incorporated within TerraVerde's preliminary remediation cost estimate for the McKeesport facility of $1.2M–$2.8M (dated October 18, 2022). The broader cost estimate encompasses both the SSD system for Building C and groundwater treatment for the toluene plume at MW-3, which may involve pump-and-treat technology, in-situ chemical oxidation ("ISCO"), or other groundwater remediation approaches. The groundwater treatment component represents the majority of the estimated remediation cost.

It is important to note that if groundwater treatment is successful in reducing dissolved-phase contaminant concentrations below applicable standards, the vapor intrusion source may be reduced over time as the subsurface contamination that drives the vapor migration is depleted. However, this process may take years to decades depending on the nature and extent of the source (particularly if NAPL is present), and the SSD system would remain necessary as an interim and potentially long-term engineering control during the remediation period. There is no assurance that source reduction alone would eliminate the need for the SSD system.

C. Additional Recommended Investigation Steps

The sub-slab soil gas sampling conducted during the Phase II ESA represents the initial characterization of the vapor intrusion pathway at Building C. Additional investigation is recommended to fully characterize the pathway, confirm actual exposure levels, and support the design of an effective mitigation system. The following steps are recommended:

1. Indoor Air Sampling in Building C. A minimum of three indoor air sampling locations within Building C, selected to represent different areas of the building and different proximity to the former UST field, plus one outdoor/ambient air sample collected at an upwind location as a background reference. Indoor air samples should be collected using Summa canisters and analyzed by EPA Method TO-15, consistent with the sub-slab sampling methodology. This sampling will confirm actual indoor air TCE concentrations and allow direct comparison to PA DEP indoor air screening levels and OSHA occupational limits.

2. Building Pressure Differential Measurement. A blower door test or equivalent measurement to characterize the pressure relationship between the Building C interior and the sub-slab environment under normal HVAC operating conditions. This measurement will determine whether the building's HVAC system creates positive pressure (which would reduce vapor intrusion) or negative pressure (which would enhance vapor intrusion) relative to the sub-slab zone, and will inform the design of the SSD system.

3. Multi-Seasonal Sub-Slab and Indoor Air Monitoring. A minimum of two additional sampling rounds — one during the heating season (December–February) and one during the cooling season (June–August) — to establish the temporal variability of vapor intrusion concentrations at the site. Seasonal variation is a critical factor in vapor intrusion assessment, and regulatory agencies typically require multi-seasonal data before accepting a characterization as complete.

4. Expanded Sub-Slab Soil Gas Survey. Installation of additional sub-slab sampling points to determine the lateral extent of the vapor plume beneath Building C and to evaluate whether the vapor intrusion condition extends beneath Buildings A and/or B, which are located adjacent to Building C and may overlie portions of the same subsurface contamination source zone.

These additional investigation steps were not completed before the deal pause on October 28, 2022, and should be incorporated into the Phase II scope upon resumption of transaction activities. The additional investigation would require approximately 6–9 months to complete (accounting for multi-seasonal sampling requirements) and would cost an estimated $30,000–$50,000 in consulting and laboratory fees, exclusive of the SSD system installation costs discussed above.

VIII. LIABILITY EXPOSURE ANALYSIS FOR CRESTLINE POST-CLOSING

A. Successor Liability Under Pennsylvania Law

The proposed acquisition of ACC by Crestline is structured as a stock purchase transaction. In a stock purchase, Crestline would acquire all of the outstanding shares of ACC and thereby become the owner of ACC as a going concern, including all of ACC's assets, operations, contracts, permits — and all of ACC's liabilities, whether known or unknown, disclosed or undisclosed, contingent or accrued.

This structure has significant implications for environmental liability. Unlike an asset purchase — where a buyer can, at least in theory, select which assets to acquire and leave behind undesired liabilities with the seller entity — a stock purchase transfers the entire entity, with all of its historical baggage, to the buyer. In the environmental context, this means that ACC's historical environmental liabilities, including the newly identified vapor intrusion condition at Building C, would become Crestline's liabilities (through its ownership of ACC) upon closing.

ACC, as the current owner and operator of the McKeesport facility, bears responsibility under PA DEP Act 2 and other applicable environmental laws for the environmental conditions at the property, including the vapor intrusion pathway. This responsibility extends to conditions that predate ACC's ownership (such as contamination from the Keystone Metalworks era), because Pennsylvania law imposes strict, joint and several liability on current owners and operators of contaminated properties, regardless of fault or contribution.

Post-closing, Crestline (through its ownership of ACC) would inherit these obligations in their entirety. There is no statutory liability shield for stock purchasers comparable to the innocent purchaser defense or the bona fide prospective purchaser ("BFPP") defense available in certain asset transactions under CERCLA § 107. The BFPP defense under CERCLA requires, among other things, that the purchaser acquire the property (or facility) after all disposal of hazardous substances has ceased and that the purchaser did not cause or contribute to the contamination — requirements that may be available in an asset deal but are structurally unavailable in a stock deal where the acquiring entity steps into the shoes of the responsible party.

B. Potential Regulatory Obligations

Several potential regulatory obligations flow from the vapor intrusion finding:

Reopening or New Act 2 Filing. PA DEP may require ACC (or, post-closing, Crestline/ACC) to address the vapor intrusion pathway through the Act 2 process. This could involve either reopening the 2001 NFA — on the basis that the original investigation did not evaluate the vapor intrusion pathway and the NFA therefore does not provide closure for this condition — or requiring a new Act 2 filing specifically for the vapor intrusion and associated groundwater contamination. If a new Act 2 filing is required, the entire former UST area may need to be re-characterized, potentially expanding the scope and cost of remediation significantly beyond current estimates. A full re-characterization could require additional soil borings, monitoring well installations, groundwater delineation, and source area investigation — activities that could add $200,000–$500,000 or more to the remediation cost estimate.

Enforcement Risk. Failure to address a known vapor intrusion condition could expose the facility to PA DEP enforcement action, including civil penalties for failure to remediate, failure to investigate, or failure to protect public health. PA DEP has the authority to issue administrative orders requiring investigation and cleanup, and to assess penalties for non-compliance. The risk of enforcement action increases if PA DEP becomes aware of the condition through channels other than a voluntary disclosure by ACC — for example, through the pending Title V permit modification application or through a complaint from facility employees or neighboring property owners.

Title V Permit Interaction. The pending Title V permit modification application (submitted by ACC in March 2022 for a thermal oxidizer on coating Line 4) is a separate regulatory proceeding administered by the Allegheny County Health Department, Air Quality Program. While the permit modification relates to air emissions from manufacturing operations rather than vapor intrusion, the permit review process could serve as a point of contact between the facility and regulators. PA DEP could use the permit modification review as an opportunity to inquire about other environmental compliance matters at the facility, and the existence of an unresolved vapor intrusion condition could complicate the permit review.

C. Third-Party Liability Risk

The TCE vapor intrusion condition creates potential exposure to third-party liability claims, particularly in the area of worker health:

Worker Exposure Claims. If employees working in Building C develop health effects that are or could be attributable to chronic TCE exposure from vapor intrusion, several categories of claims could result:

• Workers' compensation claims for occupational illness, which are the exclusive remedy for workplace injuries under Pennsylvania's Workers' Compensation Act but which could result in significant medical and wage-loss benefits for affected workers.

• Tort claims against thi

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum was prepared at the direction of counsel in anticipation of litigation and in connection with the provision of legal advice. It is protected by the attorney-client privilege and the work product doctrine. Do not distribute, copy, or disclose without authorization from Crestline Packaging Solutions LLC.
FROM: Harrison Caldwell, Of Counsel, Environmental & Land Use Practice Group, Calderwood & Harkness LLP
TO: Beatrice Holloway, Responsible Partner, Calderwood & Harkness LLP Grace Nakamura, Lead Associate, Calderwood & Harkness LLP Derek Huang, General Counsel, Crestline Packaging Solutions LLC Patricia Okonkwo, VP, Environmental Health & Safety, Crestline Packaging Solutions LLC
DATE: October 16, 2022
RE: Vapor Intrusion Risk Assessment — Building C, McKeesport Main Plant, 2200 Iron Works Boulevard, McKeesport, PA 15132 (Allegheny County; Parcel ID 0383-M-00125-0000-00)
MATTER NO.: 1006-00003
TRANSACTION: Proposed Acquisition of Allegheny Chemical Coatings, Inc. ("ACC") by Crestline Packaging Solutions LLC ("Crestline")
I. EXECUTIVE SUMMARY
The purpose of this memorandum is to provide the deal team and Crestline's in-house counsel with a detailed legal and technical analysis of the sub-slab soil gas sampling results for trichloroethylene ("TCE") detected beneath Building C at the McKeesport Main Plant, as part of the Phase II Environmental Site Assessment ("Phase II ESA") conducted by TerraVerde Environmental Consulting LLC ("TerraVerde"). This memorandum addresses the regulatory, health and safety, liability, and transactional implications of this finding for the proposed stock acquisition of ACC by Crestline.
Key Finding. TCE was detected in sub-slab soil gas beneath Building C at a concentration of 42 µg/m³, which exceeds the Pennsylvania Department of Environmental Protection ("PA DEP") vapor intrusion screening level of 21 µg/m³ by 100% — that is, the measured concentration is 2.0 times the applicable screening level. This is a significant finding with direct implications for human health exposure, regulatory compliance, environmental liability allocation, and the structuring of the proposed transaction.
This result confirms an active vapor intrusion pathway from residual subsurface contamination into the occupied Building C workspace, thereby validating the concerns identified as REC-1 (Recognized Environmental Condition No. 1) in TerraVerde's Phase I Environmental Site Assessment dated August 15, 2022 (the "Phase I ESA"). REC-1 flagged elevated volatile organic compound ("VOC") readings in indoor air near the Building C mixing area and identified a potential vapor intrusion pathway from residual subsurface contamination beneath the former underground storage tank ("UST") field.
The exceedance triggers several overlapping concerns that are addressed in detail throughout this memorandum:
• Regulatory Notification Considerations. The vapor intrusion condition may require reopening the 2001 No Further Action ("NFA") letter issued under the PA DEP Act 2 Land Recycling Program, or the initiation of a new Act 2 filing to address the previously unevaluated vapor intrusion pathway.
• Worker Health Exposure Concerns. Although the sub-slab concentrations are far below OSHA Permissible Exposure Limits, they exceed environmental risk-based screening levels designed to protect against chronic, long-term exposure, including cancer risk from TCE — a probable human carcinogen.
• Remedial Obligations. The exceedance will require mitigation, most likely through the installation of a sub-slab depressurization ("SSD") system beneath Building C, and potentially through broader groundwater treatment to address the underlying source of contamination.
• Transaction Structuring Implications. The vapor intrusion finding materially affects the environmental risk allocation in the proposed stock acquisition, strengthening Crestline's negotiating position for expanded escrow, uncapped environmental indemnity, and pre-closing remediation covenants.
Recommended Mitigation. The primary recommended mitigation measure is the installation of an SSD system beneath Building C. The estimated cost of the SSD system is $75,000–$150,000 for design, installation, and commissioning, with annual operation and maintenance costs of approximately $5,000–$10,000 per year. These costs are incorporated within TerraVerde's preliminary remediation cost estimate of $1.2M–$2.8M (dated October 18, 2022), which covers both groundwater treatment and vapor mitigation at the McKeesport facility.
This memorandum should be read in conjunction with the Phase II Results Analysis Memorandum — McKeesport (dated October 14, 2022), which addresses the full range of Phase II analytical findings across all media (soil, groundwater, and soil gas) at the McKeesport Main Plant. The two memoranda together form the core of the environmental diligence analysis for the McKeesport facility and will feed into the Comprehensive Environmental Diligence Summary Memorandum currently in preparation.
II. BACKGROUND
A. Property and Facility Description
The McKeesport Main Plant serves as the operational headquarters of Allegheny Chemical Coatings, Inc. ("ACC") and is located at 2200 Iron Works Boulevard, McKeesport, Pennsylvania 15132, in Allegheny County. The property encompasses approximately 14.3 acres and contains approximately 185,000 square feet of manufacturing space and 12,000 square feet of office and administrative space. The property is identified by Allegheny County Parcel ID 0383-M-00125-0000-00 and is owned in fee simple by ACC, which has held title to the property since 1987.
The McKeesport Main Plant is the largest of ACC's four operating facilities and is the primary location for the formulation, blending, and packaging of ACC's industrial coating product lines. The manufacturing campus is organized into several distinct structures, identified as Buildings A through E in the Phase I ESA and Phase II ESA reports. Each building serves a specialized function within ACC's production process.
Building C is the structure at the center of the vapor intrusion concern addressed in this memorandum. Building C is a single-story manufacturing structure within the main plant complex that houses the mixing and blending area for ACC's solvent-based and epoxy coating production lines. This is the area where raw chemical ingredients — including volatile organic compounds — are combined, heated, and processed to produce ACC's coating formulations. The chemicals routinely used in Building C operations include, among others, toluene, xylene, methyl ethyl ketone ("MEK"), and ethylbenzene, all of which are volatile organic compounds with varying degrees of toxicity and regulatory significance.
Building C is of particular environmental significance because it was constructed over, or in immediate proximity to, the former underground storage tank ("UST") field that was the subject of the 1993 tank removal and subsequent Act 2 remediation. The spatial relationship between Building C's concrete floor slab and the former UST locations creates a direct physical pathway by which volatile contaminants in the subsurface beneath the former UST field could migrate upward through the slab and into the occupied workspace — the mechanism known as vapor intrusion.
The building is a conventional industrial structure with a poured concrete slab-on-grade foundation. As is typical for manufacturing buildings of this vintage and type, the slab is not vapor-sealed and likely contains cracks, construction joints, and utility penetrations (for plumbing, electrical conduits, and drainage) that can serve as preferential pathways for vapor migration. The building's HVAC system includes mechanical ventilation consistent with industrial manufacturing operations, but the extent to which the HVAC system creates positive or negative pressure relative to the sub-slab environment has not yet been characterized.
B. Environmental History Relevant to Vapor Intrusion
An understanding of the property's environmental history is essential to interpreting the significance of the TCE detection in sub-slab soil gas and to evaluating the regulatory and liability implications.
Prior Ownership and Operations. Prior to ACC's acquisition of the McKeesport property in 1987, the site was operated as a steel fabrication facility by Keystone Metalworks, a company that is now defunct. Keystone Metalworks is believed to have operated at the site from approximately the mid-1950s through the mid-1980s, during which time the facility engaged in steel cutting, welding, machining, and metal finishing operations. Steel fabrication operations of this era commonly involved the use of chlorinated solvents — including TCE and tetrachloroethylene ("PCE") — for metal degreasing and parts cleaning. The use of such solvents frequently resulted in subsurface contamination through spills, disposal practices, and leaks from storage vessels, a pattern well-documented across the industrial landscape of the Monongahela River Valley and the broader Pittsburgh metropolitan area.
UST Removal (1993). In 1993, ACC removed three underground storage tanks, each with a capacity of 10,000 gallons, from the former UST field located beneath or immediately adjacent to Building C. The tanks are understood to have stored petroleum products (fuel oil and/or solvents) during the Keystone Metalworks era and potentially during early ACC operations. Confirmation soil sampling conducted during the tank removal identified petroleum hydrocarbon contamination in the soils surrounding the former tank excavations.
Act 2 Filing and NFA Letter (1994–2001). Following the UST removal, ACC initiated a cleanup of the contaminated soils under the PA DEP Act 2 Land Recycling Program. A Notice of Intent to Remediate was filed in 1994, and remediation activities were conducted under the Statewide Health Standard ("SHS") pathway. After completion of the soil remediation, PA DEP issued a No Further Action ("NFA") letter in May 2001, confirming that the soils at the former UST locations met the applicable Statewide Health Standards.
Critically, the NFA letter addressed soil contamination only. Groundwater conditions in the vicinity of the former UST field were not fully characterized at the time of the Act 2 investigation, and the NFA does not appear to extend to groundwater. Moreover, the 2001 NFA predates the development of PA DEP's current vapor intrusion guidance, and the vapor intrusion pathway was not evaluated as part of the Act 2 investigation. As a result, the NFA letter, while providing a measure of regulatory closure for soil contamination, does not provide protection against liability related to the vapor intrusion pathway or to groundwater contamination in the vicinity of the former UST field.
Phase I ESA Findings (August 2022). The NFA letter was identified as a Historical Recognized Environmental Condition ("HREC-1") in TerraVerde's Phase I ESA dated August 15, 2022. While the soil remediation appeared to have been successfully completed, TerraVerde noted that the NFA's limited scope (soils only, under the Statewide Health Standard) left open the possibility of unaddressed subsurface conditions.
Of greater immediate significance, TerraVerde identified REC-1 in the Phase I ESA: elevated VOC readings in indoor air near the Building C mixing area, with a potential vapor intrusion pathway from residual subsurface contamination beneath the former UST field. This REC was based on a combination of factors, including the documented history of UST releases, the building's proximity to the former UST field, the age and construction type of the Building C slab, and anecdotal reports from ACC personnel of occasional solvent-like odors in the Building C workspace that were not attributable to current manufacturing operations. REC-1 was the primary driver for the inclusion of sub-slab soil gas sampling in the Phase II ESA scope.
C. Phase II Investigation — Vapor Intrusion Component
The Phase II ESA at the McKeesport Main Plant commenced on September 12, 2022, with field activities including soil borings, monitoring well installation, groundwater sampling, and sub-slab soil gas sampling completed by September 26, 2022. The investigation was conducted by TerraVerde under the field leadership of Alicia Reyes, P.G. (Licensed Professional Geologist, Commonwealth of Pennsylvania), with project management by Kevin O'Malley, P.G., and under the overall direction of Dr. Nina Sorensen, P.E., CHMM (principal-in-charge).
Calderwood & Harkness's involvement in shaping the Phase II scope of work was integral to ensuring that the investigation adequately addressed the environmental concerns identified in the Phase I ESA. Pursuant to Calderwood & Harkness's Phase II Scope of Work Review & Comment Letter (dated approximately September 1, 2022), TerraVerde was directed to add sub-slab soil gas sampling points beneath Building C to the Phase II scope. This addition was specifically designed to evaluate the vapor intrusion pathway identified in REC-1 of the Phase I ESA. Without this addition, the Phase II would have addressed soil and groundwater conditions but would not have directly evaluated the vapor migration pathway into Building C — a gap that could have left a critical risk uncharacterized prior to deal closing.
Sub-Slab Soil Gas Sampling Methodology. Sub-slab soil gas samples were collected using Summa canisters — evacuated, passivated stainless-steel canisters designed for the collection of whole-air samples for VOC analysis. The canisters were installed at multiple sampling points beneath the Building C concrete slab, accessed through small-diameter holes drilled through the slab at locations selected to provide representative coverage of the building footprint, with particular emphasis on areas above and adjacent to the former UST locations. The sampling points were installed with temporary vapor pins and sealed to prevent ambient air infiltration, following protocols consistent with PA DEP Technical Guidance Document No. 261-0300-101 and EPA guidance for sub-slab soil gas sampling.
Laboratory Analysis. The collected samples were analyzed by Keystone Analytical Laboratories Inc. (Monroeville, Pennsylvania), a Pennsylvania-accredited environmental laboratory, using EPA Method TO-15 — the standard analytical method for the determination of volatile organic compounds in air samples collected in Summa canisters. Method TO-15 provides compound-specific identification and quantification of a broad suite of VOCs, including both chlorinated solvents (TCE, PCE, vinyl chloride, etc.) and petroleum-related compounds (BTEX — benzene, toluene, ethylbenzene, and xylenes).
Receipt of Analytical Results. The analytical results from Keystone Analytical Laboratories were received by TerraVerde on October 10, 2022, and were transmitted to Calderwood & Harkness on October 12, 2022. This memorandum is based on those results, as well as the broader Phase II analytical dataset discussed in the companion Phase II Results Analysis Memorandum dated October 14, 2022.
III. SUB-SLAB SOIL GAS ANALYTICAL RESULTS
A. TCE Detection
The most significant analytical finding from the sub-slab soil gas sampling beneath Building C is the detection of trichloroethylene ("TCE") at a concentration of 42 µg/m³ (micrograms per cubic meter).
The applicable PA DEP vapor intrusion screening level for TCE in sub-slab soil gas is 21 µg/m³, established under PA DEP Technical Guidance Document No. 261-0300-101 for the commercial/industrial use scenario. The measured concentration therefore exceeds the screening level by a factor of 2.0, representing a 100% exceedance of the applicable standard:
42 µg/m³ ÷ 21 µg/m³ = 2.0x (100% exceedance)
TCE is a chlorinated volatile organic compound that has been the subject of extensive toxicological evaluation by EPA and other regulatory agencies. TCE is classified as a probable human carcinogen (EPA Group B1 classification under the 1999 guidelines; reclassified as "carcinogenic to humans" for kidney cancer and "likely to be carcinogenic to humans" for liver cancer and non-Hodgkin lymphoma per EPA's 2011 Integrated Risk Information System ("IRIS") toxicological assessment). TCE exposure is associated with a range of adverse health effects, including kidney cancer, liver toxicity, immunotoxicity, and developmental toxicity. The 2011 IRIS assessment substantially strengthened the scientific basis for TCE's carcinogenicity and lowered the reference values used to derive risk-based screening levels, which is the basis for the current PA DEP screening level.
The presence of TCE in sub-slab soil gas beneath Building C is particularly noteworthy because TCE is not a chemical currently used in ACC's coating manufacturing operations. ACC's formulation processes at the McKeesport facility employ toluene, xylene, MEK, and ethylbenzene as primary solvent components; chlorinated solvents such as TCE and PCE are not part of the current product line. The detection of TCE in the subsurface beneath Building C therefore strongly suggests a legacy source — most likely from the former steel fabrication operations conducted by Keystone Metalworks during the pre-1987 period, when chlorinated solvents were routinely used for metal degreasing, parts cleaning, and surface preparation. This attribution is consistent with well-documented patterns of chlorinated solvent contamination at former metalworking and steel fabrication facilities throughout the Monongahela Valley and the greater Pittsburgh region.
B. Other VOC Detections in Sub-Slab Soil Gas
While the TCE detection is the primary focus of this memorandum, it is important to consider the TCE finding in the context of the broader Phase II analytical results, which are discussed in detail in the companion Phase II Results Analysis Memorandum dated October 14, 2022. The following additional contaminant detections from the Phase II are relevant to the vapor intrusion analysis:
• Toluene in groundwater at monitoring well MW-3: Detected at 1,420 µg/L, which exceeds the PA DEP Act 2 Statewide Health Standard of 1,000 µg/L — a 42% exceedance above the applicable standard. MW-3 is located in the vicinity of the former UST field and Building C.
• Xylene in groundwater at MW-3: Detected at 8,200 µg/L, which is below the PA DEP Act 2 Statewide Health Standard of 10,000 µg/L. While this result does not represent an exceedance, the concentration is elevated and indicates significant dissolved-phase contamination in the groundwater beneath the Building C area.
• PCE (tetrachloroethylene) in soil at boring SB-7: Detected at 3.8 mg/kg. This concentration exceeds the PA DEP residential direct contact standard of 2.4 mg/kg but is below the non-residential direct contact standard of 14 mg/kg. The presence of PCE is significant because PCE is a parent compound that undergoes reductive dechlorination under anaerobic groundwater conditions to produce TCE as a degradation product — a relationship discussed further in Section VI below.
These co-located contaminants in groundwater and soil support the interpretation that subsurface contamination is the source of the vapor intrusion pathway, rather than ambient or operational indoor air contributions from current Building C manufacturing operations. The presence of both petroleum-related compounds (toluene, xylene) and chlorinated solvents (TCE, PCE) is consistent with a mixed-contaminant plume originating from the former UST field and associated historical operations.
C. Significance of Exceedance
The 100% exceedance of the PA DEP screening level for TCE in sub-slab soil gas is a finding of considerable regulatory and practical significance. Several aspects of this significance merit emphasis:
First, the exceedance confirms that the sub-slab soil gas concentrations of TCE beneath Building C are sufficient to pose a potential vapor intrusion risk to indoor air quality. Sub-slab soil gas screening levels are established as conservative threshold values: when concentrations in the sub-slab environment exceed the screening level, it is assumed — absent site-specific data demonstrating otherwise — that indoor air concentrations may also exceed acceptable risk thresholds. The 2.0x exceedance is not a marginal result that might be attributed to analytical variability or sampling artifact; it represents a clear and unambiguous exceedance of the applicable standard.
Second, under PA DEP guidance (Technical Guidance Document No. 261-0300-101), when a vapor intrusion screening level is exceeded, the responsible party is expected to take one of two courses of action: (a) direct mitigation of the vapor intrusion pathway (i.e., installation of an SSD system or equivalent engineering control), or (b) further investigation, including indoor air sampling, building-specific modeling, or multi-seasonal monitoring, to determine whether the screening level exceedance actually translates to unacceptable indoor air concentrations. As discussed in Section VII of this memorandum, we recommend that Crestline pursue both direct mitigation (as a pre-closing covenant or condition to closing) and further investigation (to fully characterize the exposure pathway and support long-term remediation planning).
Third, the detection level indicates an active and ongoing migration pathway from subsurface contamination to the building interior. The fact that TCE — a compound not used in current operations — is present in the sub-slab environment at concentrations exceeding screening levels demonstrates that volatile contaminants are actively migrating from the subsurface through the unsaturated zone and accumulating beneath the Building C slab. This is not a historical or static condition; it represents a continuing release and exposure pathway that will persist unless and until the source is remediated or the pathway is interrupted through engineering controls.
IV. REGULATORY FRAMEWORK — PA DEP VAPOR INTRUSION GUIDANCE
A. PA DEP Land Recycling Program (Act 2) and Vapor Intrusion
The regulatory framework governing the evaluation and remediation of vapor intrusion conditions at contaminated sites in Pennsylvania is anchored in the Pennsylvania Land Recycling and Environmental Remediation Standards Act, commonly known as Act 2 (35 P.S. §§ 6026.101–6026.908). Act 2 establishes three alternative cleanup standards — the Statewide Health Standard, the Site-Specific Standard, and the Background Standard — and provides a process for voluntary cleanup of contaminated properties, culminating in the issuance of a relief-from-liability letter (commonly referred to as an NFA letter) upon demonstration that the applicable standard has been achieved.
PA DEP's specific guidance on vapor intrusion is set forth in Technical Guidance Document No. 261-0300-101, titled "Land Recycling Program Technical Guidance Manual — Section IV.A.4, Vapor Intrusion." This guidance document provides the framework for evaluating vapor intrusion at Act 2 sites and establishes the methodology for determining whether a vapor intrusion pathway poses a risk to human health at a given site. The guidance addresses the following key elements:
• Screening levels for sub-slab soil gas, near-slab soil gas (exterior), and indoor air for a comprehensive list of volatile organic compounds, including TCE, PCE, benzene, vinyl chloride, and others.
• Decision framework for determining when vapor intrusion investigation is warranted, what sampling protocols should be followed, and what actions should be taken when screening levels are exceeded.
• Mitigation requirements and acceptable engineering controls for addressing confirmed or potential vapor intrusion conditions, including sub-slab depressurization systems, sub-membrane depressurization systems, and building ventilation modifications.
• Long-term monitoring requirements for sites where vapor intrusion mitigation systems are installed or where ongoing monitoring is being used to demonstrate that indoor air quality is protective of human health.
Under the Act 2 framework, vapor intrusion is treated as a potential exposure pathway that must be evaluated whenever volatile contaminants are present in subsurface soil, soil gas, or groundwater at concentrations that could result in migration of vapors into overlying or adjacent buildings. The vapor intrusion pathway was not routinely evaluated at Act 2 sites prior to the development of modern vapor intrusion guidance (the first comprehensive EPA vapor intrusion guidance was issued in 2002, and PA DEP's guidance has evolved since that time), which is why the 2001 NFA for the McKeesport property did not address this pathway.
B. Applicable Screening Levels and Standards
The TCE sub-slab soil gas screening level of 21 µg/m³ is applicable to both commercial/industrial and residential use scenarios under the current PA DEP guidance. This screening level is derived from the following toxicological parameters and risk assumptions:
• Toxicity values: The screening level is based on EPA's 2012 IRIS toxicity values for TCE, which reflect the comprehensive toxicological reassessment published in September 2011. The key toxicity values include an inhalation unit risk factor for carcinogenicity and a reference concentration ("RfC") for non-cancer effects (hepatotoxicity, immunotoxicity, and developmental toxicity).
• Target risk levels: The screening level incorporates a target cancer risk of 1 × 10⁻⁵ (one excess cancer case per 100,000 exposed individuals over a lifetime) and a non-cancer hazard quotient of 1.0 — meaning that at the screening level concentration, non-cancer health effects are not expected to occur even with chronic exposure.
• Exposure assumptions: The screening level accounts for standard residential or commercial/industrial exposure durations, frequencies, and attenuation factors between sub-slab soil gas and indoor air.
The measured concentration of 42 µg/m³ exceeds both the residential and non-residential screening levels. This is significant because even under the less-restrictive commercial/industrial exposure scenario (shorter assumed exposure duration, fewer days per year), the concentration remains above the screening threshold.
Under the Statewide Health Standard ("SHS") pathway — the cleanup standard applied to the 2001 NFA — the vapor intrusion screening level exceedance would need to be addressed before a release could be considered fully remediated. The SHS pathway applies generic, statewide screening levels without site-specific adjustment, meaning that the 21 µg/m³ threshold is a bright-line standard that must be met.
Alternatively, under the Site-Specific Standard ("SSS") pathway, a site-specific risk assessment could potentially support screening levels higher than the generic SHS values. However, pursuit of the SSS pathway would require substantial additional data collection (including indoor air sampling, exposure modeling, and potentially biomonitoring), preparation and submission of a risk assessment report to PA DEP, and review and approval by the Department — a process that typically requires 12–24 months and significant consulting expense. The SSS pathway may be appropriate as a long-term strategy but does not provide near-term resolution for transaction purposes.
C. Notification and Reporting Obligations
The regulatory notification and reporting obligations arising from the TCE vapor intrusion finding are a critical consideration for both ACC (as the current property owner and responsible party) and for Crestline (as the prospective purchaser that would assume ACC's regulatory obligations in a stock transaction).
Act 2 Filing. If the McKeesport site is to be brought into (or returned to) the Act 2 cleanup process to address the vapor intrusion condition, PA DEP must be notified. This could take the form of either (a) reopening the existing 2001 NFA to address the previously unevaluated vapor intrusion pathway, or (b) initiating a new Act 2 filing for the vapor intrusion condition as a newly discovered release or migration pathway.
The existing NFA letter (May 2001) addressed soils only under the Statewide Health Standard. The NFA does not mention vapor intrusion, does not address groundwater conditions, and does not purport to provide closure for any environmental condition other than the soil contamination associated with the 1993 UST removal. Accordingly, the NFA may not provide any protection against regulatory liability or enforcement action related to the vapor intrusion pathway.
Under PA DEP regulations and guidance, a responsible party is obligated to address newly discovered releases or migration pathways, even at sites that have received prior NFA letters, if conditions have materially changed or if the original investigation did not address the pathway in question. The discovery of TCE at concentrations exceeding the vapor intrusion screening level in sub-slab soil gas beneath Building C — a pathway not evaluated at the time of the 2001 NFA — appears to constitute a "changed condition" or newly identified exposure pathway sufficient to warrant reopening the 2001 NFA or initiating a new filing.
This conclusion is supported by several factors:
(i) The 2001 NFA was issued for soils only and expressly did not address groundwater or vapor intrusion;
(ii) The vapor intrusion pathway was not evaluated because modern vapor intrusion guidance did not exist at the time of the original investigation;
(iii) The contaminant identified (TCE) is a chlorinated solvent that may not have been included in the original analytical suite if the investigation was focused solely on petroleum hydrocarbons from the USTs;
(iv) PA DEP has a strong policy interest in ensuring that NFA letters do not serve as barriers to addressing subsequently identified exposure pathways that pose a risk to human health.
Proactive vs. Reactive Engagement. There is a strategic question regarding whether proactive engagement with PA DEP — prior to closing — would be advisable. Proactive engagement could allow Crestline to establish a remediation framework and timeline with PA DEP's input, potentially avoiding the uncertainties and costs associated with a post-closing regulatory surprise. On the other hand, proactive engagement prior to the deal closing could trigger regulatory scrutiny that complicates the transaction timeline. This strategic question is addressed further in Section IX below.
V. OSHA WORKPLACE EXPOSURE STANDARDS
A. Occupational Exposure Limits for TCE
In addition to the environmental regulatory framework discussed in Section IV, workplace exposure to TCE is regulated under the Occupational Safety and Health Act through standards promulgated by the Occupational Safety and Health Administration ("OSHA"). Although the environmental and occupational frameworks serve different protective purposes and apply different exposure assumptions, both are relevant to evaluating the implications of the Building C vapor intrusion finding.
The applicable occupational exposure limits for TCE are as follows:
It bears noting that the OSHA PEL for TCE (100 ppm) was established in 1971 and has not been updated to reflect current toxicological understanding. The American Conference of Governmental Industrial Hygienists ("ACGIH") Threshold Limit Value of 10 ppm and the National Institute for Occupational Safety and Health ("NIOSH") Recommended Exposure Limit of 2 ppm are both more protective and more reflective of current science. NIOSH considers TCE a potential occupational carcinogen and recommends minimizing workplace exposure to the lowest feasible level.
B. Comparison of Sub-Slab Results to Occupational Limits
The sub-slab soil gas concentration of 42 µg/m³ is orders of magnitude below the OSHA PEL (~537,000 µg/m³), the ACGIH TLV (~53,700 µg/m³), and the NIOSH REL (~10,740 µg/m³). On its face, this comparison might suggest that the vapor intrusion finding does not present a meaningful occupational health concern.
However, this comparison must be understood with two important qualifications:
First, sub-slab soil gas concentrations are not directly translatable to indoor air concentrations. Indoor air levels of TCE resulting from vapor intrusion are typically attenuated by a factor of approximately 10x to 100x relative to sub-slab concentrations — meaning that actual indoor air concentrations are expected to be significantly lower than the sub-slab measurement. However, this attenuation factor is highly variable and depends on a range of building-specific factors, including:
• Integrity and thickness of the concrete slab
• Presence and extent of cracks, joints, and utility penetrations
• HVAC system operation and building pressure dynamics
• Temperature differentials between indoor and sub-slab environments
• Season and weather conditions at the time of measurement
Without indoor air sampling data (which has not yet been collected), it is not possible to determine the actual indoor air TCE concentration with certainty. If the attenuation factor is at the lower end of the expected range (i.e., less attenuation), indoor air concentrations could be higher than predicted; if at the upper end, indoor air concentrations may be negligible.
Second, the PA DEP screening levels and OSHA occupational limits serve fundamentally different protective purposes. OSHA standards are designed to protect against acute and subchronic workplace exposure — they set limits intended to prevent immediate or short-term health effects in healthy adult workers exposed during an 8- or 10-hour workday. In contrast, PA DEP vapor intrusion screening levels are designed to protect against long-term chronic exposure, including the incremental cancer risk associated with continuous, low-level exposure over a period of years to decades. The screening levels are set at concentrations many orders of magnitude lower than occupational limits precisely because they account for lifetime exposure durations and are designed to protect the general population, including sensitive subpopulations (children, the elderly, immunocompromised individuals) who may not be present in a workplace setting but whose risk is nonetheless relevant under environmental regulatory frameworks.
Both sets of standards are relevant to the Building C situation, but they serve complementary rather than overlapping functions. The fact that the sub-slab concentration is below OSHA limits does not eliminate the environmental and chronic health risk concern; likewise, the PA DEP screening level exceedance does not necessarily indicate that an imminent OSHA violation exists.
C. Potential Worker Health Risk Assessment
Building C houses manufacturing operations with active worker occupancy during multiple shifts, including day, swing, and potentially overnight shifts depending on production demands. Workers in Building C are engaged in mixing, blending, and quality control activities that involve direct handling of volatile solvents (toluene, xylene, MEK, ethylbenzene), for which ACC presumably maintains industrial hygiene monitoring and personal protective equipment ("PPE") programs.
Even though the sub-slab TCE concentrations are below OSHA occupational limits, the PA DEP screening level exceedance indicates a potential chronic health risk to workers exposed over long durations — particularly workers who spend the majority of their working hours in Building C over periods of years or decades. The lifetime incremental cancer risk associated with TCE exposure at or near the screening level is on the order of 1 × 10⁻⁵ (one excess cancer case per 100,000 individuals), which is within the range that EPA and PA DEP consider to be at the boundary of acceptability for environmental exposure scenarios.
Several practical steps are warranted in light of this finding:
• ACC's EHS Manager, Carl Johannsen, should be consulted regarding any existing indoor air monitoring data for Building C, the configuration and operating parameters of the building's HVAC system, and any worker exposure assessments or industrial hygiene surveys that have been conducted in connection with ACC's use of volatile solvents in the mixing and blending operations. This information is critical both for assessing actual worker exposure and for distinguishing between TCE contributions from vapor intrusion and VOC contributions from current manufacturing operations.
• Crestline's VP, Environmental Health & Safety, Patricia Okonkwo, should evaluate whether post-closing industrial hygiene monitoring specifically targeting TCE in indoor air would be appropriate, independent of the environmental regulatory obligations discussed in Section IV. Such monitoring would serve both as a worker protection measure and as a risk management tool to document exposure levels and demonstrate due diligence in protecting worker health.
• A further complication is that workers in Building C are already exposed to ambient VOCs from the coating manufacturing process. The TCE vapor intrusion adds a contaminant to the indoor air that is not associated with current operations, creating a mixed-exposure scenario that complicates attribution. If a worker were to develop a health condition associated with VOC exposure, the question of whether the condition was caused by occupational solvent exposure, TCE vapor intrusion, or some combination of both would be difficult to resolve — a factor that could complicate both workers' compensation and tort liability analyses.
VI. SOURCE ASSESSMENT AND CONTAMINATION PATHWAY ANALYSIS
A. Likely Source of TCE
As noted in Section III.A, TCE is not currently used in ACC's manufacturing operations at the McKeesport facility. Identifying the source of the TCE detected in sub-slab soil gas is important both for understanding the nature and extent of the contamination and for allocating liability in the proposed transaction.
The most likely source of the TCE is historical use of chlorinated solvents during the Keystone Metalworks era (pre-1987). Steel fabrication and metalworking operations during the 1960s through the 1980s commonly involved the use of chlorinated solvents — including TCE, PCE, and 1,1,1-trichloroethane — for metal degreasing, vapor degreasing, parts cleaning, and surface preparation prior to painting or coating. These solvents were typically stored in drums, tanks, or vapor degreasers, and releases to the subsurface occurred through spills, leaks, overfills, and improper disposal practices. The resulting contamination is pervasive at former metalworking sites throughout the industrialized regions of Pennsylvania and the broader Rust Belt.
The former UST field — consisting of three 10,000-gallon tanks removed in 1993 — is located beneath or immediately adjacent to Building C. While the USTs are understood to have stored petroleum products, it is entirely possible that chlorinated solvents were also stored, handled, or disposed of in the vicinity of the UST field during the Keystone Metalworks operations. Moreover, the soil contamination identified during the 1993 tank removal and subsequent Act 2 investigation was likely characterized using analytical methods focused on petroleum hydrocarbons (e.g., total petroleum hydrocarbons, BTEX compounds), and the investigation may not have included analysis for chlorinated solvents such as TCE and PCE. If this is the case, the chlorinated solvent contamination could have been present in the subsurface at the time of the 2001 NFA but was simply not detected because it was not tested for.
The detection of TCE in sub-slab soil gas, combined with the detection of toluene at 1,420 µg/L in groundwater at MW-3 (42% above the Statewide Health Standard), suggests a mixed-contaminant plume with both petroleum and chlorinated solvent components. This is a common contaminant profile at sites with a history of diverse industrial operations and is consistent with the property's use history as both a steel fabrication facility and a chemical coating manufacturing plant.
B. Vapor Intrusion Pathway
The vapor intrusion pathway at Building C can be described as a four-step process:
Step 1: Source. TCE is present in the subsurface beneath Building C, either as residual contamination in soil (non-aqueous phase liquid or NAPL, or sorbed to soil particles) or as dissolved-phase contamination in groundwater. The source zone is located in the vicinity of the former UST field.
Step 2: Volatilization. TCE, being a volatile organic compound with a high vapor pressure and low boiling point, volatilizes from the soil or groundwater source into the soil gas (the air-filled pore spaces within the unsaturated zone above the water table).
Step 3: Migration. TCE vapors migrate upward through the soil gas via diffusion and advection, driven by concentration gradients and pressure differentials, until they accumulate in the zone immediately beneath the Building C concrete floor slab.
Step 4: Entry. TCE vapors enter the Building C interior through pathways of least resistance in the concrete slab, including cracks, construction joints (expansion joints, control joints), utility penetrations (plumbing, electrical conduits, floor drains), and any other openings in the slab that allow communication between the sub-slab environment and the indoor air space.
Several aspects of this pathway remain uncharacterized at the current stage of investigation:
• Sub-slab depressurization field testing and building pressure differential measurements (e.g., blower door testing or pressure transducer monitoring) were not performed during the Phase II investigation. These measurements would further characterize the physical dynamics of the vapor intrusion pathway, including whether the building's HVAC system creates negative pressure (which would enhance vapor intrusion) or positive pressure (which would reduce vapor intrusion) relative to the sub-slab environment.
• Seasonal variation in vapor intrusion is well-documented in the scientific literature and in PA DEP guidance. Vapor intrusion rates tend to be higher during heating season (when buildings are typically depressurized due to the "stack effect" and windows and doors are closed) and lower during cooling season (when buildings may be ventilated and pressure dynamics are different). The September 2022 sampling represents a single data point collected during the transitional period between cooling and heating seasons, and concentrations may vary significantly across seasons. A single exceedance is sufficient to trigger further action under PA DEP guidance, but multi-seasonal data will be necessary to characterize the full range of exposure.
• Indoor air sampling has not been performed. The sub-slab soil gas concentration of 42 µg/m³ is a measurement of the TCE concentration in the air beneath the building slab, not in the occupied space itself. Actual indoor air concentrations depend on the attenuation achieved by the slab and building envelope, HVAC dilution, and other factors. Indoor air sampling is essential to confirm actual exposure levels and should be conducted as described in Section VII.C.
C. Relationship to Other Phase II Findings
The TCE vapor intrusion finding does not exist in isolation; it is part of a broader pattern of subsurface contamination at the McKeesport facility that is documented in the companion Phase II Results Analysis Memorandum dated October 14, 2022. The key relationships are as follows:
Toluene in Groundwater at MW-3. The toluene exceedance at monitoring well MW-3 (1,420 µg/L, 42% above the Statewide Health Standard of 1,000 µg/L) is located in the same area as the Building C sub-slab sampling points. The co-location of toluene in groundwater and TCE in sub-slab soil gas supports the interpretation of a common subsurface source zone in the vicinity of the former UST field, with both petroleum and chlorinated solvent contamination contributing to the overall contamination profile.
PCE in Soil at SB-7. PCE was detected in soil at boring SB-7 at a concentration of 3.8 mg/kg, exceeding the residential direct contact standard (2.4 mg/kg) but below the non-residential standard (14 mg/kg). The presence of PCE is significant in the context of the TCE finding because PCE is a parent compound of TCE in the reductive dechlorination degradation sequence. Under anaerobic groundwater conditions (which are common in the alluvial and fill materials typical of the Monongahela River Valley), PCE undergoes sequential reductive dechlorination:
PCE → TCE → cis-1,2-DCE → vinyl chloride → ethene
The detection of both PCE in soil and TCE in sub-slab soil gas is consistent with a PCE/TCE degradation sequence that reflects historical chlorinated solvent use and ongoing natural attenuation processes in the subsurface. This degradation pathway is well-established in the environmental science literature and is a hallmark of sites with historical chlorinated solvent contamination. The potential for generation of vinyl chloride — a known human carcinogen with even lower screening levels than TCE — as a further degradation product of TCE should be evaluated as part of any expanded investigation.
Lead in Soil at SB-14. Lead was detected in soil at boring SB-14 at a concentration of 680 mg/kg, exceeding the residential standard of 450 mg/kg but below the non-residential standard of 1,000 mg/kg. The lead detection is located in a different area of the property and is not directly related to the vapor intrusion pathway. Lead is a non-volatile contaminant that does not contribute to vapor intrusion. However, the lead detection is relevant to the overall environmental liability assessment for the McKeesport facility and is addressed in the companion Phase II Results Analysis Memorandum.
VII. RECOMMENDED MITIGATION MEASURES
A. Sub-Slab Depressurization System (SSD)
The primary recommended mitigation measure for the Building C vapor intrusion condition is the installation of a sub-slab depressurization ("SSD") system beneath Building C. SSD systems are the most widely used and technically proven engineering control for vapor intrusion mitigation in both residential and commercial/industrial settings, and they are recognized by both PA DEP and EPA as a presumptive remedy for confirmed or suspected vapor intrusion conditions.
How SSD Systems Work. An SSD system creates a negative pressure field (vacuum) beneath the building floor slab, reversing the natural pressure gradient that drives soil gas (and associated VOC vapors) upward through the slab and into indoor air. By maintaining sub-slab pressure slightly below the indoor air pressure, the system ensures that air flows from the building interior downward through slab cracks and penetrations, rather than soil gas flowing upward into the building. The extracted soil gas is collected, conveyed through piping to a blower unit, and exhausted to the atmosphere above the building roofline, where it disperses to concentrations far below any applicable ambient air standards.
System Components. A typical SSD system for a commercial/industrial building consists of the following components:
• Extraction points: Small-diameter (typically 2–4 inch) holes drilled through the concrete slab at strategic locations, connected to sub-slab vapor extraction risers. The number and spacing of extraction points depends on the building footprint, slab characteristics, and sub-slab soil permeability. For a building the size of Building C (~185,000 SF), multiple extraction points would be required to achieve adequate pressure field coverage.
• Horizontal piping network: PVC or HDPE piping connecting the extraction points to a central header and conveying the extracted soil gas to the blower unit.
• Blower/fan unit(s): Electrically powered blower or fan unit(s) that create the negative pressure field. Blower sizing depends on the required airflow rate and pressure differential. Blower units are typically installed on the building exterior or rooftop.
• Exhaust stack: Vertical exhaust stack discharging extracted soil gas above the building roofline, with appropriate separation from air intake vents and occupied areas.
• Monitoring points: Sub-slab pressure monitoring points installed at locations between extraction points to verify that the pressure field extends across the full building footprint. These monitoring points are checked periodically to confirm system performance.
• Slab sealing: Sealing of visible cracks, joints, and utility penetrations in the building slab to minimize air short-circuiting and improve system efficiency.
Effectiveness. SSD systems have a well-established track record of performance. When properly designed, installed, and maintained, SSD systems typically achieve 90–99% reduction in sub-slab vapor concentrations entering the building. This level of performance is generally sufficient to reduce indoor air concentrations to well below applicable screening levels, even in cases where sub-slab concentrations significantly exceed standards.
Ongoing Monitoring and Maintenance. SSD systems are active engineering controls that require ongoing operation, monitoring, and maintenance. Standard practice includes quarterly vacuum/pressure readings at monitoring points to verify that the negative pressure field is maintained across the building footprint, annual indoor air confirmation sampling to verify that the system is achieving the desired reduction in indoor air concentrations, and periodic inspection and maintenance of blower units, piping, and electrical components. These monitoring and maintenance activities are routine and relatively low-cost, but they represent an ongoing operational obligation that will persist for as long as the vapor intrusion source remains in the subsurface.
B. Estimated Costs
TerraVerde has provided the following preliminary cost estimates for SSD system installation and operation at Building C:
The range reflects uncertainty regarding sub-slab soil conditions (permeability, fill material characteristics), the number of extraction points required to achieve adequate pressure field coverage across the full building footprint, and the extent of slab sealing needed. Detailed system design, including diagnostic testing (communication testing, pilot testing) to optimize extraction point placement and blower sizing, would be required before a more refined cost estimate can be developed.
These SSD costs are incorporated within TerraVerde's preliminary remediation cost estimate for the McKeesport facility of $1.2M–$2.8M (dated October 18, 2022). The broader cost estimate encompasses both the SSD system for Building C and groundwater treatment for the toluene plume at MW-3, which may involve pump-and-treat technology, in-situ chemical oxidation ("ISCO"), or other groundwater remediation approaches. The groundwater treatment component represents the majority of the estimated remediation cost.
It is important to note that if groundwater treatment is successful in reducing dissolved-phase contaminant concentrations below applicable standards, the vapor intrusion source may be reduced over time as the subsurface contamination that drives the vapor migration is depleted. However, this process may take years to decades depending on the nature and extent of the source (particularly if NAPL is present), and the SSD system would remain necessary as an interim and potentially long-term engineering control during the remediation period. There is no assurance that source reduction alone would eliminate the need for the SSD system.
C. Additional Recommended Investigation Steps
The sub-slab soil gas sampling conducted during the Phase II ESA represents the initial characterization of the vapor intrusion pathway at Building C. Additional investigation is recommended to fully characterize the pathway, confirm actual exposure levels, and support the design of an effective mitigation system. The following steps are recommended:
1. Indoor Air Sampling in Building C. A minimum of three indoor air sampling locations within Building C, selected to represent different areas of the building and different proximity to the former UST field, plus one outdoor/ambient air sample collected at an upwind location as a background reference. Indoor air samples should be collected using Summa canisters and analyzed by EPA Method TO-15, consistent with the sub-slab sampling methodology. This sampling will confirm actual indoor air TCE concentrations and allow direct comparison to PA DEP indoor air screening levels and OSHA occupational limits.
2. Building Pressure Differential Measurement. A blower door test or equivalent measurement to characterize the pressure relationship between the Building C interior and the sub-slab environment under normal HVAC operating conditions. This measurement will determine whether the building's HVAC system creates positive pressure (which would reduce vapor intrusion) or negative pressure (which would enhance vapor intrusion) relative to the sub-slab zone, and will inform the design of the SSD system.
3. Multi-Seasonal Sub-Slab and Indoor Air Monitoring. A minimum of two additional sampling rounds — one during the heating season (December–February) and one during the cooling season (June–August) — to establish the temporal variability of vapor intrusion concentrations at the site. Seasonal variation is a critical factor in vapor intrusion assessment, and regulatory agencies typically require multi-seasonal data before accepting a characterization as complete.
4. Expanded Sub-Slab Soil Gas Survey. Installation of additional sub-slab sampling points to determine the lateral extent of the vapor plume beneath Building C and to evaluate whether the vapor intrusion condition extends beneath Buildings A and/or B, which are located adjacent to Building C and may overlie portions of the same subsurface contamination source zone.
These additional investigation steps were not completed before the deal pause on October 28, 2022, and should be incorporated into the Phase II scope upon resumption of transaction activities. The additional investigation would require approximately 6–9 months to complete (accounting for multi-seasonal sampling requirements) and would cost an estimated $30,000–$50,000 in consulting and laboratory fees, exclusive of the SSD system installation costs discussed above.
VIII. LIABILITY EXPOSURE ANALYSIS FOR CRESTLINE POST-CLOSING
A. Successor Liability Under Pennsylvania Law
The proposed acquisition of ACC by Crestline is structured as a stock purchase transaction. In a stock purchase, Crestline would acquire all of the outstanding shares of ACC and thereby become the owner of ACC as a going concern, including all of ACC's assets, operations, contracts, permits — and all of ACC's liabilities, whether known or unknown, disclosed or undisclosed, contingent or accrued.
This structure has significant implications for environmental liability. Unlike an asset purchase — where a buyer can, at least in theory, select which assets to acquire and leave behind undesired liabilities with the seller entity — a stock purchase transfers the entire entity, with all of its historical baggage, to the buyer. In the environmental context, this means that ACC's historical environmental liabilities, including the newly identified vapor intrusion condition at Building C, would become Crestline's liabilities (through its ownership of ACC) upon closing.
ACC, as the current owner and operator of the McKeesport facility, bears responsibility under PA DEP Act 2 and other applicable environmental laws for the environmental conditions at the property, including the vapor intrusion pathway. This responsibility extends to conditions that predate ACC's ownership (such as contamination from the Keystone Metalworks era), because Pennsylvania law imposes strict, joint and several liability on current owners and operators of contaminated properties, regardless of fault or contribution.
Post-closing, Crestline (through its ownership of ACC) would inherit these obligations in their entirety. There is no statutory liability shield for stock purchasers comparable to the innocent purchaser defense or the bona fide prospective purchaser ("BFPP") defense available in certain asset transactions under CERCLA § 107. The BFPP defense under CERCLA requires, among other things, that the purchaser acquire the property (or facility) after all disposal of hazardous substances has ceased and that the purchaser did not cause or contribute to the contamination — requirements that may be available in an asset deal but are structurally unavailable in a stock deal where the acquiring entity steps into the shoes of the responsible party.
B. Potential Regulatory Obligations
Several potential regulatory obligations flow from the vapor intrusion finding:
Reopening or New Act 2 Filing. PA DEP may require ACC (or, post-closing, Crestline/ACC) to address the vapor intrusion pathway through the Act 2 process. This could involve either reopening the 2001 NFA — on the basis that the original investigation did not evaluate the vapor intrusion pathway and the NFA therefore does not provide closure for this condition — or requiring a new Act 2 filing specifically for the vapor intrusion and associated groundwater contamination. If a new Act 2 filing is required, the entire former UST area may need to be re-characterized, potentially expanding the scope and cost of remediation significantly beyond current estimates. A full re-characterization could require additional soil borings, monitoring well installations, groundwater delineation, and source area investigation — activities that could add $200,000–$500,000 or more to the remediation cost estimate.
Enforcement Risk. Failure to address a known vapor intrusion condition could expose the facility to PA DEP enforcement action, including civil penalties for failure to remediate, failure to investigate, or failure to protect public health. PA DEP has the authority to issue administrative orders requiring investigation and cleanup, and to assess penalties for non-compliance. The risk of enforcement action increases if PA DEP becomes aware of the condition through channels other than a voluntary disclosure by ACC — for example, through the pending Title V permit modification application or through a complaint from facility employees or neighboring property owners.
Title V Permit Interaction. The pending Title V permit modification application (submitted by ACC in March 2022 for a thermal oxidizer on coating Line 4) is a separate regulatory proceeding administered by the Allegheny County Health Department, Air Quality Program. While the permit modification relates to air emissions from manufacturing operations rather than vapor intrusion, the permit review process could serve as a point of contact between the facility and regulators. PA DEP could use the permit modification review as an opportunity to inquire about other environmental compliance matters at the facility, and the existence of an unresolved vapor intrusion condition could complicate the permit review.
C. Third-Party Liability Risk
The TCE vapor intrusion condition creates potential exposure to third-party liability claims, particularly in the area of worker health:
Worker Exposure Claims. If employees working in Building C develop health effects that are or could be attributable to chronic TCE exposure from vapor intrusion, several categories of claims could result:
• Workers' compensation claims for occupational illness, which are the exclusive remedy for workplace injuries under Pennsylvania's Workers' Compensation Act but which could result in significant medical and wage-loss benefits for affected workers.
• Tort claims against thi

MEMORANDUM

MATTER NO.: 1006-00003

I. EXECUTIVE SUMMARY

II. BACKGROUND

III. SUB-SLAB SOIL GAS ANALYTICAL RESULTS

V. OSHA WORKPLACE EXPOSURE STANDARDS

VI. SOURCE ASSESSMENT AND CONTAMINATION PATHWAY ANALYSIS

VII. RECOMMENDED MITIGATION MEASURES

VIII. LIABILITY EXPOSURE ANALYSIS FOR CRESTLINE POST-CLOSING

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