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April 6, 2005

Scotia Prince Cruises Forced To Cancel
2005 Season Due To Continued Mold
Contamination In International Marine Terminal

PORTLAND, MAINE Scotia Prince Cruises has announced that the entire 2005 season is canceled due to continued mold contamination at the City of Portland's International Marine Terminal (IMT).

The EPA's Center for Disease Control's National Institute for Occupational Safety and Health (NIOSH) has conducted two separate evaluations of the IMT in the past month. Additionally Scotia Prince Cruises' expert toxicologist, Dr. Richard Lipsey, has examined the building in coordination with NIOSH and again on April 1, 2005, a date the City of Portland had repeatedly committed to for delivery of safe and appropriate facilities.

In Dr Lipsey's report on the status of the IMT as of April 1, 2005, he states:

"Therefore, I do not feel the building is safe for occupancy and will only get worse until the procedure is done properly - a procedure which I doubt is possible in this building - as NIOSH said - it is not fit for human habitation and never was. This old warehouse is almost 100 years old and had railroad cars in ... It was never intended to be used as offices for humans. In conclusion, after some 7 months under the City supervised remediation, this building is as flawed as it was in August 2004."

"It is clear the IMT has not been safely remediated", states Matthew Hudson, chairman, Scotia Prince Cruises. "Moreover, as Dr. Lipsey underlines, this is seven months after the City, in direct contradiction to our experts, said that (A) the public areas were safe; (B) SPC was "overreacting" in evacuating our personnel and passengers; (C) the remediation (of the so-called "safe" areas) would take (1) a week and then (2) would be complete by December 22 and then (3) by January 26, then (4) March 25, and then (5) would absolutely, definitely be completed by April 1."

"It is self evident that we cannot subject our employees or passengers to an unsafe environment. As such we are forced to cancel the 2005 season due to the City's failure to meet its leasehold obligations to provide Scotia Prince Cruises with safe and appropriate facilities from which to operate."

For further information please see the attached letter from Matthew Hudson to the employees of Scotia Prince Cruises and the accompanying time line of events.

Mark Hudson
SVP Marketing and Finance
Scotia Prince Cruises
T: 905-526-6101; E: mhudson@scotiaprince.com

April 5, 2004

Dear Colleagues

I know that you have all been anxiously waiting for April 1 test results from the IMT so let me get right to the point.

In early 2005 the City informed us the IMT was ready for use but refused to certify it as safe and refused to allow our experts access for testing.

On March 9/10, 2005 the National Institute for Occupational Safety and Health (NIOSH) performed a Health Hazard Evaluation of the IMT. We took this opportunity to have our expert toxicologist attend and take samples. The NIOSH public report will not be issued for some weeks/months but it is clear from (a) their inspection and assessment; (b) the NIOSH mold samples; (c) comments by the City "remediation" contractor; and (d) the samples taken by Dr. Richard Lipsey our expert toxicologist - that the building had not been properly remediated and was not safe.

On March 29, 2005 NIOSH returned for additional evaluation of the federal areas and for medical interviews with the federal employees.

On March 30, 2005 the federal agencies informed the City they were evacuating the IMT.

On April 1, 2005 the federal agencies left the IMT.

Also on April 1, 2005 the City of Portland allowed us access to the remaining portions of the IMT and we asked Dr. Lipsey to travel from Florida again to re-evaluate the building. His April 1 evaluation shows that the City had still taken no steps to prevent water incursion notwithstanding the City's full knowledge that the building cannot be made safe until after it has been made watertight. As you know by now, the first step in remediating a building is to stop the water incursion. As a result mold will re-grow in the IMT. By April 1 all of the areas of contamination had been rendered inaccessible by the City e.g. with new drywall) so that Dr. Lipsey could only take air samples which are ineffective in such circumstances. The samples he took on March 10, 2005 did prove the continuing presence of high levels of toxic molds as did the NIOSH samples and apparently those taken by the City.

Additionally, the second floor office areas have not been remediated and they are known to contain high levels of mold contamination. The City proposes to leave these highly contaminated areas intact without remediation. The City says it will seal off the areas but provides no explanation of how, or what will prevent the mold from continuing to spread within the wall cavities that remain open, or through the ceilings/walls as water continues to enter the building. You may not know of the repeated leaks through the second floor from the roof and burst pipes including during the recent NIOSH visit when water was actively pouring from the second floor ceiling, soaking the carpet and continuing through the carpet into the first floor public areas that City had "remediated".

Dr. Lipsey's report says in part "Since water intrusion was still going on in the building and there is evidence that contaminated wood had simply been painted over, then I agree with the NIOSH certified industrial hygienist that it is only a matter of time before the mold and bacteria grow back in the walls and on the walls and other places. Since the water intrusion is so widespread, the entire facility suffered from cross-contamination all during the months since cosmetic remedial work started in October. The contaminated areas would again contaminate the remediated areas.

The second floor had not been remediated and I was told by the city engineer that the 2nd floor will be sealed off and put under negative pressure to keep it from contaminating the public areas. Even if the building envelope, which is extremely porous, would allow such containment (it will not), that makes no sense since water intrusion is still going on in the public areas and the Customs area is still contaminated and adjoins the public areas with common voids and air space above and containment can not be complete to keep the high levels of pathogenic mold and bacteria, in the tens of millions/gram of dust, from reentering the "remediated" areas. It is only a matter of time before the toxic mold and bacteria grow back on the walls and other places and enter the public areas. Customs employees have moved out and if they took their contaminated files and soft furniture with them, then they will only cross contaminate their new offices.

Therefore, remediation is not complete and water intrusion is still going on, and the millions of mold and bacteria pathogens per gram of dust that I found just three weeks ago in my sampling, will only grow back in time, especially with the warm weather coming. The contaminated wall void wood, i.e. sill plates and joists, have not been sanded, they have just been painted over according to John Gill. Water is still flowing under the doors when it rains soaking into "remediated" walls.

Therefore, I do not feel the building is safe for occupancy and will only get worse until the procedure is done properly - a procedure which I doubt is possible in this building - as NIOSH said - it is not fit for human habitation and never was. This old warehouse is almost 100 years old and had railroad cars in it according to Jeff Monroe. It was never intended to be used as offices for humans. In conclusion, after some 7 months under the City supervised remediation, this building is as flawed as it was in August 2004."

On December 21, 2004 the City's outside counsel Mr. Cliff Ruprecht wrote to our attorney and said "Remediation operations will be completed by December 22nd. The remediation has been conducted by Biosafe Environmental Services, Inc., a fully qualified and highly respected firm with extensive experience. As a result of the remediation work, the building will get a clean bill of health from Biosafe. The City will promptly share Biosafe's assessments with SPC and its consultants and will work with SPC to facilitate appropriate independent confirmation of Biosafe's results by SPC's consultants."

Yet Dr. Lipsey reports today that "I was under the impression that I would be doing Final Clearance Testing for re-occupancy by Scotia Prince employees and that Mark Coleman [Biosafe] would be doing it simultaneously. Mark Coleman was not there and I was told that he had no plans to be there. I was surprised to find that build back had been done without any final clearance testing which is clearly in violation of the industry standard of care. No sheetrock contaminated with Stachybotrys, and other pathogenic molds and bacteria, were saved for me to sample or to even know where the reservoirs of toxic mold and bacteria had been so that I could inspect and sample properly. In fact, [previous] efforts to get access into the public areas prior to build back were denied to me as I was told that the city had locked out Scotia Prince employees from even entering the facility. It was only with the help of a federal agency, NIOSH, that I was able to enter the facility on March 10, 2005.

Therefore, with build back being done and the sheetrock evidence I needed being destroyed and the painting over of the sill plates and joists that were previously contaminated in the public areas, there was really no urgency for me to do any sampling April 1, but I took a few samples anyway since it is a long way to come to be denied proper access to the facility. Industry best practice includes two rock solid pillars - 1) stop all water incursion first before any removal of mold or damaged materials and 2) no build back until after 3rd party independent clearances are complete and show success."

Therefore it is clear the IMT has not been safely remediated. Moreover, as Dr. Lipsey underlines, this is 7 months after the City in direct contradiction to our experts, said that (A) the public areas were safe; (B) SPC was "overreacting" in evacuating our personnel and passengers - Port Director and Assistant City Manager to John Hamill and Bob Schrader; (C) the remediation (of the so-called "safe" areas) would take (1) a week and then (2) would be complete by December 22 and then (3) by January 26, then (4) March 25, and then (5) would absolutely, definitely be completed by April 1.

You can easily see the situation. It is self evident that we cannot subject our employees or passengers to an unsafe environment. As such we are forced to cancel the 2005 season due to the City's failure to meet its leasehold obligations to provide your company with safe and appropriate facilities from which to operate.

This is a very difficult decision but we have no choice. We cannot, and will not knowingly expose our employees or customers to toxic molds, especially given the medical conditions and substantial degree of permanent impairment of the majority of the IMT employees that have been assessed.

Since August 23, 2004 the City of Portland has ignored the advice, reports and protocols of national experts. By repeatedly committing to a goal that it made no good faith effort to achieve, the City has induced SPC to incur millions of dollars in unnecessary expenses in preparation for a season which cannot take place.

Such behavior by the City has put Scotia Prince Cruises in a precarious financial position. The cancellation of our 2005 season will damage the economies of Yarmouth, Nova Scotia and, ironically, greater Portland. Particularly grievous to me, the City's actions now threaten the jobs of many of our employees those same employees who were instrumental in generating hundreds of millions of tourism dollars in the Portland region, the State of Maine, Nova Scotia and the other Atlantic Canada Provinces.

Having now been forced into a difficult situation your company needs to make some tough decisions regarding future operations. I want to minimize your uncertainty, but as I promised when I visited with you in Portland and Yarmouth two weeks ago, I first wanted to share with you the conclusion regarding 2005 as soon as we knew it. As matters have transpired it is a sad one. More information about the company and your own situation will follow later this week once we have had a chance to examine alternative business plans.

I wish there was better news.

I have attached a partial time line which we had prepared to help us keep track of the facts. It may assist you. If you wish more information about Dr. Lipsey or the care giver for your colleagues Dr. Shoemaker, their information is referenced below.

If you have any questions please contact your manager.


Matthew Hudson
Scotia Prince Cruises


2001: Jack Elementary School in Portland is discovered to have airborne Stachybotrys (which is one of the most toxic molds known to produce mycotoxins) with a reported level of 100 CFU/cu. meter (Colony Forming Units/cubic meter).

The City of Portland (City) closes the school, purports to remediate it, then without admitting a mold problem, declares the school unsafe due to structural deficiencies in the roof and tears the school down.

Aug 23, 2004: At 0900 hours Scotia Prince Cruises (SPC) hand delivered a notice to the City (Mayor and City Manager) that our testing had found high levels of dangerous molds, including Stachybotrys, in the International Marine Terminal (IMT). At the same time SPC provided the relevant lab results to the City and informed the City that the building was not safe. We also provided the lab results to the other users of the building (CBP and USCG) by 1030 hours. SPC prevented our employees and our clients from using the building and operated for 2 months from tents.

City officials immediately responded by saying we were overreacting and that we had invented the mold problem in order to sue the City. The IMT has airborne Stachybotrys counts 54 times higher than that reported for Jack Elementary, which the City shut immediately, then remediated then demolished. In addition the IMT had 36 additional types of mold with airborne counts as high as 111,000 CFU/cu. meter. Many of them are toxic or pathogenic molds known to produce mycotoxins.

The EPA and Center for Disease Control definition of a "Sick Building" is one in which 20% of the occupants are ill 100% of SPC's IMT employees exhibit symptoms of mold poisoning.

Sept 1, 2004: City issues a media release stating: "public waiting areas at the International Marine Terminal [are] safe for public use", but that "Scotia Prince's indoor office spaces [should] not be used until remedial steps are taken to lower the incidence of mold particles within these office spaces", and the City is acting on a report by Turner Building sciences that includes 7 recommendations including "materials should be removed as outlined in accordance with guidelines published by the EPA and the New York Department of Health". [Both these guidelines state the first step is to "Solve the moisture problem" or "mold will re-grow".]

As for the public areas, Assistant City Manager Mead states to the media "While the waiting area also has mold, the types found are harmless even in great quantities and do not call for any remediation".

The portions of the building used by US Customs, Immigration and Border Patrol have only low levels of mold.

Sept 16, 2004: In a letter, the City admits the offices in the warehouse section of the IMT are unsafe to occupy, but states "public areas are safe and available for immediate use"; however the City plans to repair "water damage" near public areas of the International Marine Terminal.

Assistant City Manager Mead states the repairs include replacing damaged tiles, wall structures and clean and service the HVAC and should be completed "early" the week ending Sept 26.

Sept 17, 2004, Assistant City Manager Mead states to the media "We're beginning today to do some remedial work on the International Marine Terminal in the eastern wing of the building where the passenger areas are...Even though we don't believe there are any air quality concerns over there, the consultant did identify areas where there had been water damage from the (heating and air conditioning) system."

Sept 24, 2004: City closes the entire IMT after Appledore Engineering Inc., who "looked at the pilings in August", reported that "wood pilings were so rotten and weak that the western end of the terminal might collapse during a storm" and "It is our professional opinion that repairs are neither practically nor economically feasible, due to the widespread advanced deterioration".

No explanation is given why this "opinion" does not extend to the entire structure. City councilor Will Gorham, when shown Appledore's report during a City Hall meeting states "They are so corroded and rotted they look like toothpicks".

While City councilors are given copies of the report, SPC has yet to see the Appledore report or another two City engineering reports done in the Spring of 2004 the latter reports we presume did not mention anything about an imminent collapse of the building. Your company has been asking the City for its various engineering reports on the building for several years.

Nov 2004 Our IMT exposed employees are examined by a leading biotoxin (mold) physician and a wide variety of tests and blood work is done. Toxic mold illness was determined in every case except one a member of the Yarmouth staff that had brief exposure to the IMT in 2001.

Dec 2004 Remediation of the "safe" federal areas begins. City official tells federal employees that they only have molds that are safe and that the "bad" molds are only on the Scotia Prince Cruises side of the building.

Dec 16, 2004: City Transportation Director Jeff Monroe states to the media " The mold remediation should be complete by the end of this month and the terminal ready for the Scotia Prince in the spring".

Jan 6, 2005: Demolition of the warehouse section begins. [As of April 1, a "completion" date to which the City has repeatedly committed, the replacement facilities were not near completion nor were they in accordance with your company's minimum operating needs, needs which your company has repeatedly provided to the City.]

Jan 8, 2005: Assistant Port Director Ben Snow states to the media "the unsafe part of the terminal is being demolished and the area with the mold has been upgraded and now only needs minor repairs".

Jan 2005: We write to the City asking them to certify the building as safe to use; to provide us with the methods and materials used; to allow us access to test the building. City refuses all of these requests.

Jan 2005: City writes to us that the remediation is complete and the building is ready to be used. We write again and again asking for City to certify the building as safe to use; to provide us with the methods and materials used; to allow us access to test the building. City refuses all of these requests.

Mar 9-10, 2005: the National Institute for Occupational Safety and Health (NIOSH) part of the EPA's Center for Disease Control, which had been contacted by SPC employees, CBP employees and P&O Ports, conducts a Health Hazard Evaluation (HHE) to determine if "workers are exposed to hazardous materials or harmful conditions". The HHE includes a high level team consisting of 2 medical doctors and 2 environmental technicians. At the closing meeting, attended by several senior City officials, it was noted that no attempt to prevent water incursion at the IMT had taken place and as a result the IMT still leaked water incursion through the roof; under doors; around windows and up through the floors plus condensation in the walls.

The NIOSH team stated: "The whole structure is probably going to have a problem being made water tight, so there may always be water intrusion issues and therefore any time you have water intrusion issues you have mold recurrence issues. ... The specific problem with the HVAC system, I don't think that has been fixed. That's due to the cooling capacity of the coils on the demand cooling in summer. The coils freeze up and overflow the condensate drain that runs down into those areas below you talk about... that's certainly not been addressed."

Dr. Lipsey queried, "Until water intrusion is stopped, HVAC fixed and roof fixed, is remediation really something that is top priority?"

NIOSH replied, "Well, that's a good question. You typically need to solve the water issues before you spend a lot of extra money doing a retrofit. In fact, we typically recommend that you fix the water intrusion first, then you remediate the mold & get it out of the building and then you go back in and do your new construction. That's typically the ideal situation."

NIOSH also stated that it is widely understood by remediation professionals that the first step in remediating a building is to stop the leaks and that the failure to do so meant that proper remediation could not take place; and that the IMT which was originally built in 1909 as a warehouse "is not and has never been, fit for human habitation."

During the HHE, the City's remediation contractor admits:

to NIOSH that the building still has dangerous molds that have not been removed; and

to Scotia Prince Cruises' expert that nothing has been done to make building watertight because that was "not my job".

Notwithstanding these statements, the City continued to "remediate" the IMT without preventing further water incursion, apparently continuing to use the same contractor.

Mar 29, 2005: NIOSH team returns for further evaluation and investigation of the Customs and Border Protection (CBP) areas of the IMT and the CBP employees.

Mar 29, 2005: Port Director Monroe states to the media "major renovations at the International Marine Terminal should be completed by the end of this week".

Mar 30, 2005, CBP notifies the City that CBP employees will evacuate the building, reportedly due to a variety of safety and health related concerns.

Mar 31, 2005: Monroe states to the media "New modular offices, a 6,000-square-foot warehouse and a newly converted waiting room at the International Marine Terminal are just about ready for the staff and visitors of Scotia Prince Cruises".

In truth the modular offices are not new and are not suitable which the City knows; the warehouse is too small - which the City knows; and has no freezer and no cooler - which the City knows; the IMT waiting room is neither converted nor properly remediated nor safe and none of the facilities are close to being ready. As replacement offices, purportedly designed to meet our needs, the City provides old (3+ years) used portables designed for Salem State College, with no alteration of floor plan other than slight modification for a "ticket office" that can only hold a small number of pax at a time.

Additionally Monroe makes misleading comments about SPC including that SPC is "not sponsoring the traditional Muscular Dystrophy Association Smile-A-Mile fund-raising event this year". [SPC has never been the sponsor of this event and only stepped in at the last moment last year to save the event on which we lost money and still have $25,000 in a cash bond tied up in the event].

Apr 1, 2005 Federal employees move out of the IMT.

Apr 1, 2005 Scotia Prince Cruises inspects the trailers meant to be our offices and the temporary structure being erected meant to be our warehouse, bonded storage, freezer and cooler.

The trailers ("new" according to the City's media announcements) are not in accordance with our needs having been constructed for a state college several years ago.

The temporary structure is not large enough for our needs as the City knows, having been ordered for the City's own purposes for using the IMT as a freight terminal, and having been designed contrary to our requirements which the City had in their hands before ordering the structure.

As of April 1, 2005 the structure has no freezer and no cooler.

Apr 1, 2005: SPC is granted access to the "remediated" IMT but is unable to conduct proper bulk sampling tests due to a continuing cover-up effort by the City which contravenes all recognized best practices in mold remediation.

Also worth knowing In October 2005 your company asked the City to indicate not later than November 22, 2004 that the premises would be fully and safely remediated in time for the 2005 season and that the City provide a financial guarantee. The City provided a guarantee that safe premises equal to or better than those in place at the beginning of the 2004 season would be made available not later than April 1, 2005. It refused to meet the financial request thus forcing the company to make a multi-million dollar "bet" on the City's performance of its promises.

The City has consistently stated that the entire building was safe, that the public areas were safe, that the federal areas were safe, that Scotia Prince Cruises had made untrue statements about the safety of the building and that the company intended to use those statements to gain money from the City. Lately the City has made statements to the public and to important commercial and other partners of Scotia Prince Cruises that whereas the City has done a "Herculean" job to "renovate" the IMT and provide "new" offices and warehousing for Scotia Prince, conversely the company had no intention to operate the 2005 season and had spent only "10%" of its usual advertising.

Throughout this entire period since August 23 the City has each month continued to demand the full rent for the facilities including the demolished portions and the unusable portions of the IMT to which access had been denied to the company between October 2004 and April 1, 2005.

Notwithstanding its egregious conduct in allowing a health hazard to exist, then (a) denying its existence; (b) attacking and denigrating Scotia Prince Cruises for discovering it; (c) attempting a cynical effort over many months to deny then cover up the problem, in order to induce our staff, passengers and federal agencies to use the unsafe facility - the City at various times has also threatened legal action against your company for "non-performance" if we did not operate the 2005 season.

For more information please visit:

The lab we have used since August 2004 to evaluate IMT samples
(this is the same lab used by NIOSH)
P&K Microbiology - www.stl-inc.com/labs/P&K/about/AboutUs.htm

The toxicologist expert we use
Dr. Richard Lipsey - www.richardlipsey.com/

The physician treating our employees and other IMT patients:
Dr. Ritchie Shoemaker - https://www.chronicneurotoxins.com/

Other helpful information:

Dr. Richard L. Lipsey
Toxicologist and Instructor
University of North Florida, OSHA Cert/HazMat
Univ. of Florida Jax Poison Control Board
Lipsey CV ( resume ) ---Toxicology And Environmental Health Associates

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