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SIGNATURE EDWARD FACKENTHAL
TITLE ASSISTANT SECRETARY
ATTACHMENT TO SUB-ITEM 77 E
I
In January, 1998, the United States Environmental Protection Agency notified the
Company of its cleanup efforts at a landfill in or near Upper Black Eddy in
northern Bucks County, Pennsylvania. The Company was identified as a potentially
responsible party ("PRP"). Information furnished to the Company is that EPA has
spent $11,000,000 to date on cleanup costs and expects that the remaining costs
will bring the total to $30,000,000. There are eight PRP's in the Company's
negotiating group.
At present, the Company does not know (a) the actual costs of the cleanup
(b) whether the Company has any link to the site (c) the number of other PRP's
that can be found to contribute to the common expense (d) if the Company's link
to the site is established, the allocable share of the costs the Company should
bear (e) the value of indemnity provisions in the Company's agreement with
another company or (f) the negotiation position of EPA.
Because of these several unknowns, the Company cannot predict with
reasonable accuracy what, if any, the Company's ultimate liability will be.
However, based upon the facts now known, the Company's liability could be
significant.
II
On or about September 8, 1998, pursuant to an agreement, the Company paid
$141,500 in escrow in expected settlement of administrative proceedings brought
against it and others by the Federal Environmental Protection Agency. The matter
was in regard to a landfill located in Newlin Township, Chester County,
Pennsylvania known as the Strasburg Superfund Site. In the same matter, the
United States of America, on September 28, 1998, acting for "the Administrator
of the United States Environmental Protection Agency" began suit against the
Company and the others in the District Court for the Eastern District of
Pennsylvania, caption number 98 CV 5160 alleging that the Company, when an
operating steel company, was a generator of waste transported to the site by
outside haulers, and seeking environmental damages. At the same time EPA lodged
a proposed consent decree pending solicitation of public comment about the
settlement terms embodied in the proposed decree; the decree in turn provided
the above amount of $141,500 for the Company's share of the damages. If approved
this matter, previously reported, will be settled.
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<NAME> NRM Investment Company
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Board of Directors
NRM Investment Company
Rosemont, Pennsylvania
In planning and performing our audit of the financial statements of NRM
Investment Company for the year ended August 31, 1998, we considered its
internal control structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of NRM Investment Company is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in conformity with generally
accepted accounting principles.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and may not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
August 31, 1998.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
BEARD & COMPANY, INC.
Reading, Pennsylvania
September 18, 1998
