Monday, February 9, 2004 - Dow Community Advisory Panel Minutes

Thee Dow Community Advisory Panel met on February 9, 2004, at 6:00 p.m., at the Dow Conference Center in Plaquemine, Louisiana.

After the facilitator welcomed those present and introductions were made, the panel then approved the minutes of the January 13, 2004 meeting (with one correction noted).

Site Overview
Ms. Carville presented an overview of the Dow - Louisiana Operations Plaquemine site, stating that Dow is a 107-year old, U.S. based, science and technology company with annual sales of $33 billion. It produces more than 3,200 products at 208 sites in 38 countries and employs 46,000 worldwide. Dow's products address consumer needs in 10 essential markets, including food, building maintenance and construction, transportation, furniture and furnishings, paper and publishing, home care and improvement, personal and household care, health and medicine, water purification, and electronics and entertainment. Dow practices sustainability, meaning it can have economic development and produces goods in a safe manner for the environment and people. Although this is a challenge, Dow must weigh the benefits versus the risks to attain sustainability. Dow's overarching objective is to maximize long-term stockholder value from a growing portfolio of science-based businesses. In order to maximize cash generation, Dow must be the lowest cost global producer, integrate the company's sites and products, maintain technology leadership, and invest for a competitive advantage.

Dramatic changes in energy prices over the past year have impacted Dow adversely. Other changes in the chemical industry and the world include industry over-capacity and supply and demand imbalances, a sluggish economy, and global competition. Additionally, increasing litigation and regulations, security issues, and transportation costs (rail) are contributing factors to the challenges for the chemical industry. There is more economic growth in Asia and the Middle East while less economic growth in North America, and customers are shipping products overseas. Some of the impact on Dow due to these factors include decreased earnings, a high debt level, increased internal spending in recent years, a negative cash flow, and increased energy costs. Dow plans to focus the organization on implementing Dow's strategy with more speed, focus, discipline, and accountability for delivering results and adding a growth strategy focused on new business development and global expansion, continuing its performance improvement drive, and streamlining its organizational structure. Dow's emphasis on EH&S and compliance will continue to remain top priority.

There are 6 Dow sites in Louisiana: ANGUS at Sterlington; Dow at Plaquemine, Grand Bayou, and St. Charles Operations; Amerchol in Greensburg; and DuPont-Dow Elastomers in Reserve. Dow's Plaquemine site began operations in 1958 and currently employs 3,000 employees and contractors. It is the largest employer and taxpayer in Iberville and West Baton Rouge Parishes. The site is one of the largest petrochemical facility in the state. It is actually a large "industrial park" with 23 production plant included in the park. Over 50 different products are produced at the site, including chlorine, antifreeze, plastics, synthetic rubbers, cleaning solvents, and surfacants for cosmetics, soaps, and pharmaceuticals. The site has approximately $3.5 billion in assets, and produces about 14.5 billon pounds of product annually on a 1600-acre site. The site is a non-union salaried operation.

The Dow Plaquemine site has reduced its toxic air emissions by 70% since 1988, and agency reportables by 71% since 1992. It has a nationally recognized community awareness/emergency response system, has been an OSHA VPP Super Site for 12 years, and has received numerous community awards.

The Plaquemine site is very involved in community outreach projects, including participation in high school lab waste pick-up, Habitat for Humanity on the West side, Household Hazardous Materials Collection Day, Door-to-Door Visits to Neighbors, and the Dow CAP. Dow pays $60 million in state and local taxes annually, has a total payroll (employee and contract) of $340 million, contributes to the community approximately $2 million per year, and makes purchases of $400 million each year ($70 million on the West side).

Dow has been recognized as a United Way Super Star company and is the second largest contributor to the United Way in the state of Louisiana. Dow supports the Baton Rouge Food Bank, food and toy drives, blood drives, donates surplus material and equipment, etc. The site also participates in the "Comeback Kids" program, Back to School on the Westside, the ABC skills school, Hands-On Science Program for Kindergarten through 6th grade, PTEC scholarships, science fairs, and mentoring. There are over 700 Dow employees who support 40 Dow-sponsored activities, donating 20,000 hours annually.

Answers to Questions Included the Following:

1. Natural gas prices have increase for two reasons: a) the supply is not meeting the demand; and b) there is a severe situation in Venezuela, which caused the shutdown of oil production in that country, causing a surge in prices in the U.S.
2. Natural gas is transported primarily from the Gulf Coast area.
3. Natural gas is flared off in some parts of the world.
4. An alternative fuel (instead of natural gas) is coal; however, it is more difficult to make a clean, synthetic fuel using coal.
5. Dow was organized into 8 businesses, which have now been consolidated to 3. These 3 groups will try to determine Dow's best asset base. Additionally, Dow is looking at its assets globally to determine what businesses it should remain in.
6. Dow utilizes in-house attorneys as well as outside counsel to deal with legal matters.
7. A large percentage of the Iberville Parish Schools' budget comes from Dow. Dow has a state property tax exemption on some equipment but still pays a large amount of property tax due to the capital-intensive nature of the chemical industry.

Responsible Care Performance Measurements
Mr. Graham provided Responsible Care Performance Measurements for the period January 12-February 9, 2004 (attachment). He stated that there was 1 injury thus far in 2004, when a contract custodian received a laceration on her head. While she was removing cleaning materials from a closet, she hit a light with a mop, the light broke, and then fell, cutting her head. There was one agency audit during the reporting period, when the DEQ performed its annual RCRA inspection of hazardous facilities onsite. Some of the drums were mislabeled and the corrections were made on the spot. In response to a question by a panel member, Mr. Graham stated that no notice is given prior to an inspection. On January 22, 2004, an agency reportable occurred, when a transfer line leaked147 pounds of product into the river. The plants along the river participate in the early warning network system.

"Dow in the News"
Ms. Babin provided the panel with a copy of "Dow in the News - Louisiana Recap of December 2003 - January 2004" (attachment). Safety Town continues from February 3-11, 2004 in West Baton Rouge Parish, and from February 27-March 12, 2004 in Iberville Parish. Student job shadowing and science fair judging are also scheduled in February. The Morrisonville film will be presented to the Nazarene Baptist Church on February 15 at 7:00 p.m.

Grand Bayou Update
The residents of the Grand Bayou area are still displaced; however, a target date has been set by the Assumption Parish Office of Emergency Preparedness for 2/13 for their return to their homes. Vent wells were drilled by Gulf South Pipeline, including one in the Grand Bayou community, to control the natural gas venting and isolate the gas pocket. Additionally, air monitoring has been conducted in the area and will continue.

Answers to Questions Included the Following:

1. It should be possible to drill water wells in the area, following regulations by state Departments of Transportation and Natural Resources.
2. The Assumption Parish Office of Emergency Preparedness is going to seek recommendations from DEQ, Natural Resources and State Police as to the safety of the Grand Bayou area prior to making a decision to lift the evacuation and road closure.

Setting of Meeting Dates
The CAP set the second Monday of each month at 6:00 p.m. as its regular meeting date and time. Meeting dates for 2004 will be as follows:
March 8
April 12
May 10
June 14
August 9
September 13
October 11
November 8
December Dow Open House

Next Meeting
The next Dow CAP meeting will be held on Monday, March 8, 2004 at 6:00 p.m. The agenda will include either the presentation of the Morrisonville documentary or a presentation on natural gas, as well as a discussion of agenda topics. The facilitator will send the panel a list of suggested agenda topics prior to the meeting and asked members to think about what topics they would like to discuss.