ASHLAND SENTENCED TO PAY $7 MILLION AND PLACED ON PROBATION

As A Result Of 1997 Refinery Sewer Fire

WASHINGTON, D.C. – Ashland Inc. (NYSE: ASH) was sentenced has been by a federal judge in Minneapolis to pay more than $9 million in fines and restitution in connection with a massive explosion at the company's St. Paul Park refinery more than five years ago that injured several people, the Justice Department and the Environmental Protection Agency announced. In addition, Chief Judge James M. Rosenbaum sentenced Ashland to commit to paying millions more to upgrade the St. Paul Park refinery and placed the company on five years of probation.

The sentence arises from a May 16, 1997 sewer fire at the refinery which was caused by the company placing volatile light-end hydrocarbons into its sewer system. The hydrocarbons escaped from the sewer, found a heat source and ignited into a fireball.

After the company's on-scene Emergency Response Team and several local fire departments responded to the calls for assistance, the sewer fire suddenly went out, but reignited when an eruption of liquid from the manhole shot several stories high into the air. That fireball engulfed some Ashland employees.

On May 13, 2002, Ashland was charged in a three-count Information with violating the New Source Performance Standards (NSPS) of the Clean Air Act (CAA), negligent endangerment under the CAA and submitting a false writing to the Minnesota Pollution Control Agency. The same day, the company agreed to plead guilty to the negligent endangerment charge and the false writing charge.

Ashland further agreed to a deferred prosecution on the NSPS charge – agreeing to facts sufficient to show a violation of the NSPS and has agreed it has no defense to that charge should the matter be properly re-initiated by the government during the next four years based upon a willful failure of the company to abide by terms or conditions of its plea agreement. The NSPS violation would also be a first-of-its-kind criminal prosecution.

"The team that investigated this case deserves credit for this successful prosecution," said Tom Sansonetti, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "We were fortunate to have had a top-notch investigative team led by the Environmental Protection Agency's Criminal Investigation Division and the Federal Bureau of Investigation. They worked closely with our office to ensure the facts were fully explored as we moved forward with the case. This was a complex case, that resulted in a fair and just resolution."

Glenn W. Hammer, Ashland's Vice President for Environmental, Health, and Safety, received the sentence on behalf of the company from Chief Judge James M. Rosenbaum. The sentence includes a $1.5 million criminal fine, as well as restitution payments to the injured employees and the responding fire departments. Ashland was also ordered to pay $3.5 million to the most seriously injured firefighter and to provide certain other benefits to that employee and his family, including life-time medical coverage. Five other Ashland employees, who were less severely injured, were each awarded $10,000. The local fire departments, including Ashland's ERT, were each awarded $50,000.

"This case serves as an example to the serious threat posed to human health when environmental crimes are committed, and should be a warning to companies not to disregard their environmental obligations," said EPA Assistant Administrator for Enforcement John Peter Suarez. "The prosecution of this case, which requires the company to upgrade its facility, further ensures the protection of both human health and the environment, assuring us that a tragedy like this won't happen again."

Additionally, Ashland was ordered to pay $3.9 million to the National Park Foundation,

a Congressionally chartered non-profit organization that supports the national park Service to assist with various efforts along the Mississippi River in the greater metropolitan area of the Twin Cities through the Mississippi National River Area (MNRRA). The MNRRA is a federal component of the National Park Service.

Finally, Ashland was ordered to promptly begin and complete in a reasonable amount of time not to exceed four years, the upgrade of all process sewers, junction boxes and drains at the St. Paul plant. It is expected that this work will cost the company approximately $4 million dollars.

"We believe this is a very important prosecution," said Tom Heffelfinger, the United States Attorney for Minnesota. "This was a case where there was a tremendous personal cost for Ashland's violation of the environmental laws that govern its practices. The environment was harmed, of course, but one cannot escape the personal toll this case had on Ashland's employees and their families. It is our hope that this prosecution sends a strong message to all companies that we will vigorously enforce the laws to protect the environment and their employees."

The case is the result of an investigation by the Environmental Protection Agency's Criminal Investigation Division and the Federal Bureau of Investigation. Assistant United States Attorneys Bill Koch and Hank Shea from the United States Attorneys Office in Minnesota, and Mark Kotila, Department of Justice Environmental Crimes Section, prosecuted the case.

###

02-741