EPA-542-B-98-005
March 1998
\
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
SOLID WASTE AND EMERGENCY
RESPONSE
MEMORANDUM
SUBJECT:
FROM:
Guidance for Implementing Superfund Reform Initiative 9a: Risk Sharing
TO:
Stephen D. Luftig, Director
Office of Emergency and Remedial Response
Walter W. Kovalick, Jr., Ph.D, Director
Technology Innovation Office
Barry N. Breen, Director
Office of Site Remediation Enforcement
Director, Waste Management Division,
Regions 1, 3, 6, 7
Director, Environmental Services Division,
Regions 1,6,7
Director, Emergency & Remedial Response Division,
Region 2
Director, Hazardous Waste Management Division,
Regions 3, 6, 8, 9
Director, Hazardous Waste Division, Region 10
Regional Counsels, Regions 1-10
Attached is guidance developed to support implementation of Superfund Reform
Initiative 9a: Risk Sharing. Under this initiative, EPA agrees to share the risk of implementing
innovative remediation technologies which have potential for improved performance and reduced
costs. The guidance was distributed for Regional review and comment.
EPA's potential exposure is limited to 50% of the cost of the innovative remedy if the
remedy fails and if subsequent remedial action is required. As a form of underwriting, this
initiative is intended to remove a source of reluctance to try innovative approaches. The
guidance provides for review by a technical evaluation panel which will approve promising
technologies for risk sharing: Since these will generally be technologies with more potential than
risk, actual outlays should be limited. Since the purpose of risk sharing is to encourage use of
Recycled/Recyclable • Printed with Vegetable Oil Based Inks on 100% Recycled Paper (40% Postconsumer)
-------
technologies with potential for'application across remedial program and regional boundaries,
funding for risk sharing will be handled at the national level.
There is currently one approved risk sharing project underway - permeable barrier wall
technology at the Somersworth, NH Superfund site. We are currently receiving approximately
an inquiry a month regarding this initiative. Several projects have proceeded to the discussion
stage.
Attachment
-------
OSWER DIRECTIVE
9010.02
24 March 1998
GUIDANCE ON INNOVATIVE TECHNOLOGY RISK SHARING
I. Background
Estimates of the eventual cost of cleaning up the nation's hazardous waste sites
highlight the need to support the development of more cost-effective cleanup
technologies. Potentially responsible parties (PRPs) are sometimes reluctant to
implement new technologies due to concerns about having to "pay twice" if the
innovative approach fails to achieve the required levels of cleanup. As part of the
Superfund Reform Initiatives, the Technology Innovation Office (TIO) and the Office of
Emergency and Remedial Response (OERR) in the Office of Solid Waste and Emergency
Response (OSWER), with the assistance of the Office of Site Remediation Enforcement
(OSRE) in the Office of Enforcement and Compliance Assurance (OECA), are
implementing a program to share the risk of using selected innovative technologies.
II. Purpose
The purposes of this initiative are the following:
• To encourage the demonstration and use of innovative technologies with the
potential to lower costs and/or improve performance at a particular site and at
other Superfund sites, and to document these early applications to assist future
selection of response actions;
• To support developers of promising technologies, especially small businesses, by
enhancing contracting opportunities .with PRPs; and
• To encourage PRPs to assume a more active role in the development of new
technologies for site remediation.
III. Program Description
If the selected innovative response action fails at a project selected for this
initiative and a contingent response action is required, EPA intends to use the CERCLA
claims procedures to share the cost of the contingent response action (Le., risk share) in
an amount equal to (1) 5.0% of the estimated cost of the failed innovative response action;
(2) 50% of the actually incurred cost of the failed innovative response action; or (3) $10
-------
million, whichever is the least. If a proposal is submitted to implement a technology
developed by a PRP, EPA may risk share at a lower percentage.
Full-scale projects are the focus of this initiative. EPA will consider risk sharing
of field pilot-scale proposals only if important information, such as that related to
engineering scale-up, will be generated. Early projects will provide insight into how to
implement risk sharing as effectively as possible.
EPA's maximum exposure to future remediation costs will be limited to $40
million for the initial program (and to $10 million per project as noted above). EPA has
established the $40 million program cap to facilitate fiscal management, but is under no
obligation to commit to this level of risk sharing. Furthermore, this cap is based on
estimated, not actual, costs. The actual costs of this program may be lower if, for
example, pilot sites include ex situ technologies where failure is likely to be evident early
in the process.
Only projects conducted by non-federal PRPs are eligible for this initiative, and
EPA expects that each risk sharing agreement will be formalized in a settlement
agreement in a timely manner. If there are unreasonable delays by the PRPs in
formalizing a settlement agreement and implementing the innovative response action,
EPA may rescind its risk sharing offer.
Superfund Innovative Technology Evaluation (SITE) program resources may be
available to assist in preparing demonstration plans and conducting sampling and
analysis.
IV. Process for Candidate Selection
Projects, which may involve either removal or remedial actions, will be nominated
by EPA Regional offices. The Regions are encouraged to contact OSWER's Technology
Innovation Office (TIO) when they believe a project may be a good candidate for this
initiative. Regions may submit risk sharing proposals either before or after a response
action has been selected for the site.
Each application should describe the planned innovative project, discuss the
proposed criteria and method(s) for evaluating success/failure of the innovative response
action, provide cost and time estimates, and provide a schedule for negotiating a
settlement agreement. Preliminary and follow-up interactions between Regional and
Headquarters staff may be necessary and are encouraged.
-------
Proposals will be reviewed by a Technical Evaluation Panel (TEP) comprised of
representatives from the Office of Research and Development, OSWER, the Office of
Enforcement and Compliance Assurance, and other offices as appropriate. The panel will
be chaired by TIO and will convene as necessary to evaluate applications. EPA
Headquarters hopes to complete TEP review within 30 days after receiving a complete
application package.
If the innovative response action has already been selected for the site, the TEP
will determine whether it is approved for the risk sharing program. If the response action
for the site has not yet been selected, the Region may wish to know whether a particular
option, if selected, would be eligible for the program. In that case, the TEP would advise
as to eligibility, and the Region would decide whether to actually select that response
action based on the usual removal or remedial selection criteria.
When considering applications for risk sharing, the panel will apply criteria
including the degree to which the technology or application is under-represented in EPA's
experience base, and the potential for benefits across the spectrum of remediation
programs if the technology is successful. The TEP will not second guess the technical
basis for selection of the response action for use at the site.
Determination of project eligibility will be left to the judgment of the TEP, which
will generally select proposals based on the needs of the Superfund program. Current
needs include alternatives to conventional stabilization processes for metals and other
inorganics, in situ technologies in general, in situ ground water techniques, processes to
treat non-aqueous phase liquids (especially dense sinkers), techniques for recovery and
treatment of wastes in fractured bedrock, technologies for treatment of arsenic and
mercury, and technologies for complex waste mixtures.
V. Implementation at Selected Sites
A. In General
For each project selected for this initiative, EPA and the PRPs will negotiate a
settlement agreement in the form of a remedial design/remedial action (RD/RA) consent
decree for each remedial project or an administrative order on consent (AOC) for each
removal project. The settlement agreement will require the PRPs to implement the
selected innovative response action and the contingent response action, if necessary. The
Region should attach to each such settlement agreement the ROD or Action
-------
Memorandum, as appropriate, in which it has selected the innovative response action and,
unless impracticable, specified a contingent response action to be implemented in the
event that the innovative response action fails to meet the specified performance
standards. For any site where an innovative remedy was selected in a ROD which does
not specify a contingent remedy, the Region may later need to prepare a ROD amendment
or a new ROD if it subsequently determines that a contingent remedy is necessary. For
similar situations in the removal context, the Region may need to modify the removal
action plan.
As discussed in greater detail below, each settlement agreement should include the
following: (1) a provision requiring the PRPs to provide cost and performance data to
EPA; (2) a statement of success/failure criteria; (3) a provision allowing EPA to approve
modifications to the innovative response action if it believes that such modifications will
improve response action performance; and (4) a provision regarding cost sharing in the
event the innovative response action fails. Additionally, the settlement agreement should
require the PRPs to develop a Technology Evaluation Plan to address specific details
regarding submission of data on cost and performance and regarding interim milestones
to assess the success or failure of the innovative response action.
B. Cost and Performance Data
A key component of this initiative is the generation of high quality information on
response action performance and cost that can be used by other remedial and removal
action decision-makers. In addition, in the event that the innovative response action fails,
EPA will need to know the actual costs of that response action when calculating the
amount of costs that it will share with the PRPs. The settlement agreement should
therefore require the PRPs to provide detailed cost and performance data to EPA.
C. Success/Failure Criteria
The development of success/failure criteria is critical to the success of this
initiative. The settlement agreement should specify such criteria with as much detail as
the technology and application allow. The principal measure of "failure" will most likely
be inability to meet required cleanup levels and performance standards. For purposes of
this initiative only, other criteria that may be helpful in reaching a conclusion that a
response action has "failed" include excessive costs (e.g.. caused by reduced throughput
or excessive equipment downtime) and exceedance of emission or effluent limits.
-------
If feasible, the settlement agreement should also specify a set of milestone dates or
points at which the effectiveness of the innovative response action could be evaluated.
The agreement should also state that EPA has the right to declare to the PRPs in writing
when and if it has determined that the response action has failed. Innovative response
action costs that are incurred after EPA has provided notice of failure will not be included
in EPA's reimbursement calculations.
D. Modifications to the Innovative Response Action
In order to improve the performance of a technology that is not achieving required
results, it may be necessary to change procedures or make additional capital investments
which may improve performance. The settlement agreement should include a provision
allowing for, and committing the parties to implement, these modifications. The
provision should allow either EPA or the PRPs to propose such modifications and should
give EPA the discretion to approve or deny any such modifications proposed by the
PRPs.
E. EPA's Intent to Cost Share in the Event the Innovative Response Action
ails
As noted above, if the selected innovative response action fails at a project selected
for this initiative and a contingent response action is required, EPA intends to use the
CERCLA claims procedures to share the cost of the contingent response action (Le., risk
share) in an amount equal to (1) 50% of the estimated cost of the failed innovative
response action, (2) 50% of the actually incurred cost of the failed innovative response
action, or (3) $10 million, whichever is the least. The settlement agreement should
therefore include a provision (1) describing this intent, (2) stating that any such cost
sharing is subject to appropriated and unobligated funds being available in the Hazardous
Substance Superfund at the time the PRPs are required to implement the contingent
response action, and (3) stating that EPA is not obligated to cost share if there are
unreasonable delays by the PRPs in implementing the innovative response action. For the
purposes of (2) above, timing of funding shall be evaluated by the National Risk-Based
Priority Panel against funding needs for other enforcement projects in a given fiscal year.
If the innovative technology was developed by the PRPs, the settlement agreement could
decrease the 50% figure used in the above calculations.
The provision should also state that when calculating 50% (or other percentage) of
the estimated cost of the innovative response action, EPA will not include estimates of
any costs that it determines are not directly related to the innovative response action (see
-------
Attachment). With respect to EPA's calculation of 50% (or other percentage) of the
actually incurred costs of the innovative response action, the provision should state that
EPA will use the data on innovative response action costs submitted by the PRPs but will
exclude (1) any costs, except for demobilization costs, that are incurred after EPA has
stated, in writing, that the response action has failed, and (2) any costs that it determines
are not directly related to the innovative response action (see Attachment).
In the event the innovative response action fails and the PRPs are required to
implement the contingent response action, EPA will allow the PRPs to use the CERCLA
claims procedures to seek reimbursement, subject to the restrictions described above, of
some of the costs of the contingent response action. The settlement agreement should
therefore require the PRPs, after receiving EPA's notice that the innovative response
action has failed, to (1) submit an application for preauthorization of the contingent
response action in accordance with the CERCLA claims procedures set forth at 40 C.F.R.
Part 307, and (2) comply with 40 C.F.R. Part 307 during all phases of the claim process.
If you have any questions about this document, please call Jim Cummings of TIO
at (703) 603-7197, Deniz Ergener of OSRE at (202) 564-4233, or Seth Bruckner of
OERR at (703)-603-8766.
* * * ***************************** *>!::(:*#•,): ##:!:*:)::(:#:,}:#:(:
NOTICE: The policies and procedures set out in this document are not final agency
action, but are intended solely as guidance. They are not intended, nor can they be relied
upon, to create any rights enforceable by any party in litigation with the United States.
EPA officials may decide to follow the guidance provided in this document, or to act at
variance with the guidance, based on an analysis of site-specific circumstances. The
Agency also reserves the right to change this guidance at any time without public notice.
************************ ***********************!(:
-------
Attachment
COMPONENTS OF INNOVATIVE RESPONSE ACTION IMPLEMENTATION
ELIGIBLE FOR RISK SHARING
For the benefit of all parties, EPA should be as specific as possible regarding site
activities that EPA will include when calculating 50% (or, if the innovative technology
was developed by the PRPs, other percentage) of the estimated and actually incurred costs
of the innovative response action. This specificity will facilitate settlement negotiations
and response action implementation by minimizing confusion and misunderstandings.
Risk sharing is generally intended to apply strictly to implementation of the
innovative response action. Basic site security, such as restricting access to the site using
fencing, and provision of alternative water supplies will generally be accomplished before
the innovative response action is implemented and will not be eligible for risk sharing. In
contrast, security associated with a specific component of the innovative response action,
such as a treatment unit, may be eligible for risk sharing.
The following list is intended to be illustrative. Other activities, such as site- or
technology-specific activities, may occur at sites selected for this initiative.
Activity Eligibility
1) Site Security NO (Should already
be in place)
Access Control
Security Personnel
2) Alternative Water Supplies, NO
Relocation, and Other
Unrelated Operable Units
3) Permitting and Regulatory Affairs NO
Costs
4) Work Plans (Implementation, YES
Health and Safety)
-------
5) Remedial Design Activities YES
6) Treatability Studies Performed After YES
the Settlement Agreement Has Been
Entered Into
7) PRP's Intramural Oversight Costs NO
8) Bid Contingency/Profit Components YES
9) Legal Costs NO
------- |