UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OSWER DIRECTIVE NUMBER 9834.17
JUL 30 1993
MEMORANDUM
SUBJECT: Transmittal of Guidance on CERCLA Settlements With De
Micromis Waste Contributors
FROM: William A. White'
Enforcement Counsel for Superfund
/*_ Bruce M. Diamond, Direct
"office of Waste Programs
?TO: Regional Counsels
Regional Waste Management Division Directors
Attached please find the final "Guidance on CERCLA
Settlements With De Micromis Waste Contributors." The purpose of
the memorandum is to provide guidance on using CERCLA's
settlement authorities to resolve the CERCLA liability of parties
who have contributed even less hazardous substances to a site
than the de minimis parties the Agency traditionally pursues.
These parties will hereinafter be referred to as "de micromis"
parties and EPA settlements with such parties are referred to as
"de micromis settlements."
The attached memorandum describes the types of situations in
which a Region may find that it is in the public's interest to
exercise enforcement discretion by offering de micromis
settlements. The memorandum also explains how to use EPA's
existing settlement authority in an expeditious manner to resolve
the liability of these de micromis parties. We are in.the
process of developing appendices to the guidance, which will
include a model CERCLA Section 122(g) Administrative Agreement, a
model Section 122(g) Federal Register Notice, a questionnaire and
examples of notification, declaration and certification letters
for potential de micromis settlors.
Attachment
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OSWER DIRECTIVE NUMBER 9834.17
JUL 3 0 1993
MEMORANDUM
SUBJECT: Guidance on CERCLA Settlements With De Micromis Waste
Contributors . '
William A. White I ~". .- -'- ---'
Enforcement coun~~~perfund ~
Bruce M. Diamond, Directo
tOffice of Waste Programs forcement
Regional Counsels
Regional Waste Management Division Directors
FROM:
TO:
I.
PURPOSB
EPA has long believed that it is in the public interest' to .
develop ,procedures for expeditiously resolving the potential .-
CERCLA liability of contributors of small amounts of hazardous
substances to Superfund sites. The Agency has previously
published a number of guidance documents' sebting out '
. methodologies for settling with such parties, traditionally known
as ~ minimis contributors, using the provisions of Section
122(g) of the Comprehensive Environmental Response, Compensation,
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (CERCLA), Pub. L. No. 99-'499.1 The
", "
11 This memorandum supplements existing guidances, as they are
applied to de micromis parties. See "Interim Guidance on
Settle~ents with ~ Minimis Waste Contributors under Section
122(g) of SARA" (Adams/Porter, June 19, 1987) published at 52
Fed. Reg. 24333 (June 30, 1987), the "Interim ModelCERCLA ,
Section 122(g) (4) ~ Minimis Waste Contributor Consent Decree and
Administrative Order on Consent" (Reich/Lucero, Oct. 19, 1987),
published at 52, Fed. Reg. 43393 (Nov. 12, 1987), ,a,nd the
"Methodology ~or' Early De Minimis Waste Contributor Settlements
under CERCLA Section 122(g) (1) (A)" (Diamond/White, June 2, 1992),
(OSWER Directive #9834.7-1C). Guidance on settlements with ~
minimis landowners under Section 122(g) (1) (B) is provided in
"Guidance on Landowner Liability Under Section 107(a) (1) of
CERCLA, and Settlements with Prospective Purchasers of
Contaminated 'Property, " published at 54 Fed. Reg. 34,235 (Aug.
18, 1989), ,
..
Printed Oft ~ Paper
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purpose of this memorandum is to provide guidance on using.
CERCLA's settlement authorities to resolve the CERCLA liability
of parties who have contributed even less hazardous substances to
a site than the de minimis parties the Agency traditionally
pursues. These parties will hereinafter be referred to as "de
micromis" parties and EPA settlements with such parties will be
referred to as "de micromis" settlements.
This memorandum describes the types of situations in which a
Region may find that it is in the public interest to exercise
enforcement discretion by offering de micromis settlements. The
guidance also explains how to use EPA's existing settlement.
authority in an expeditious manner to resolve the liability of de
micromis parties and to grant them the full extent of
contribution protection available under the statute. The
guidance will be supplemented with appendices that will include:
a model CERCLA Section 122(g) Administrative Agreement for De
Micromis Settlements, a model Section 122(g) Federal Register
Notice; a questionnaire and examples of notification, declaration
and certification letters for potential de micromis settlors.
II.
BACI
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For the most part, EPA generally uses its enforcement
discretion to settle or litigate with parties the Agency itself
has identified as PRPs. In certain circumstances it may be
appropriate for the Agency also to extend settlement
opportunities to parties not noticed by the Agency who have
nonetheless received or may receive contribution demand letters
from other PRPs at a site or been sued in third party suits.
Sometimes these parties have contributed such minuscule amounts
of hazardous substances, that EPA has not known of their
existence. Alternatively, EPA may have known about the parties
but not actively sought to pursue enforcement actions against
them, preferring to focus its limited resources on more
significant contributors. However, transaction costs for these
small contributors may be high. In order to provide resolution
of their liability quickly and fairly, EPA could settle with
eligible parties using this guidance. .
To better understand the potential uses to which de micromis
settlements might be put, it is useful to examine several .
examples of sites where PRPs have made demands for contribution
against parties who were not initially pursued in government
enforcement efforts, and against whom the government would in all
likelihood never have taken enforcement action.
~
A.
New York Example
The State of New York brought a cost recovery action under
CERCLA regarding a municipal landfill. The defendants in the
State action; the individual owners of the property, then sued
two major industrial generators at the ~ite for contribution.
These two parties agreed to immediately provide $4 million for
what was expected to be ~ $9 million cleanup and the State agreed
not to interfere with th~ir efforts to seek contribution. The
two industrial generator parties ("second-round contribution
action plaintiffs") then sued 603 parties, including area towns,
school districts and small-business owners, seeking $5 million in
an action for contribution. The second-round contribution action
defendants included an Elks club, an exercise gYm, a donut shop,
a pizza parlor and restaurants.
The second round contribution action plaintiffs hired a
consultant to formulate each contribution action defendant's
allocation of the site costs. Several of the second round
contribution.action defendants were charged with a six-figure
sum~ However, about 80% of the other allocations-were under
$10,000 and more than half were under $5,000. At a minimum,
second round contribution action defendants were assessed a
$3,000 "transaction" fee if the contribu.tion action plaintiffs
Property at Superfund Sites," (Clay/Ludwiszewski, July 3, 1991),
(OSWER Directive #9834.6)
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could not determine what an entity sent to the landfill. The
transaction fee was charged to contribution action defendants
even though there was no evidence of what. materials were sent to
the site.
After sending demand letters, the contribution action
plaintiffs offered to settle with the contribution action
defendants at half their allocated price prior to a set dead-
line. Approximately 85% of the contribution action defendants
chose to settle, with the aggregate settlement figure totaling
about $2 million. Many of these settlors believed they were not
liable parties, but decided to settle to avoid any further
transaction costs. Indeed, a group of contribution action
defendants who refused to settle were dismissed from the case
after providing affidavits that they had sent no hazardous
substances to the landfill other than those normally associated
with household waste.
B.
Connecticut Example
Another controversial example of a contribution action
involving third parties arose in a case which consolidated
several actions concerning two landfills. . The landfills were
both owned and operated by the same family. They both contained
large quantities of municipal solid waste (MSW). The United
States pursued only industrial generators and municipalities
about whom the United States had site-specific evidence of
hazardous substance contributions. The settling defendants
connected to 'each landfill formed two coalitions. Collectively,
these two coalitions sued, or proposed to sue, over 1,000 third
parties who had contributed only MSW to the landfills. The Court
eventually permitted the addition of only about 40 parties to
this contribution case.
c.
Michigan Example
At another municipally owned and operated landfill at which
hazardous substances from industrial sources were co-disposed
with MSW, EPA sent special notice letters to the municipal
owner/operators and several industrial generators. EPA then
reached a settlement with the major PRP, who agreed to perform
the remedial design/remedial action, and also with the municipal
owner/operators for cash payments and work at the site. The
settling major PRP then sent its own version of a contribution
demand letter threatening to sue over 800 generat9rs and
transporters at. the site. These transporters and generators
included approximately 200 small businesses, schools, non-profit
organizations and associations, as well as several other
industrial and MSW generators. The parties included non-profit
charities, an aviation history museum, a symphony society, the
Little L~ague, and a church.
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In response to the major PRP's letter threatening suit, over
200 of these 800 parties, the bulk of which were only MSW
. contributors, came forward requesting to be included in the main
settlement with the United States. EPA included these potential
third party defendants in the settlement consent decree.
III.
DISCUSSION
In each of the situations discussed above, PRPs who were
the subject of EPA or State government enforcement actions
brought or threatened to bring contribution actions against
hundreds of additional parties, whom the governments had either
not been aware of, or had elected not to pursue. The PRPs took
the position that household waste and commercial trash contain
hazardous substances in an effort to justify their contribution
demands upon entities almost never included in government
enforcement actions.
We believe that the contribution demands and several recent
third party suits against parties that could qualify for a de
micromis settlement produce inequitable burdens (e.g., increased
litigation expenses' and transaction custs) for these parties.
This unfairness arises from the fact that the amount of waste
they contributed or the amount of hazardous substances in the
waste they contributed is so small that it would be unfair and
inequitable to seek any significant contribution from them. In
these circumstances, unless EPA provides a means for prompt,
inexpensive and permanent settlement of the de micromis parties'
alleged liability, it is the PRPs who are determining the
effective scope of CERCLA enforcement activities rather than the
government agencies who administer the statute. EPA intends to
use its authority where appropriate to review and resolve
potential liability of de ~icromis parties. This settlement
guidance is designed to help the Regions in managing the
situations similar to those in the above examples, where the
Region determines it is ~~ the public interest to do so and
resources are available.
IV.
POLICY
CERCLA provides the Agency with the authority to enter into
settlements at any time with persons who may have contributed
minuscule amounts of hazardous substances to a Superfund site.
We believe that such settlements could be helpful in reducinq
transaction costs and in promoting more equitable allocations ot
responsibility for de micromis parties at Superfund sites.
In appropriate circumstances, a Region may want to offer.
de micromis settlement to certain parties who contribute
hazardous substances to Superfund sites (e.g., recycling
faciliti~~ or landfills). The Agency will generally consider ..
'de micromis parties those generators or transporters who
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contribute a minuscule amount of hazardous substances to a
Superfund site. A de micromis settlement may be especially
appropriate for such entities as small businesses, associations,
non-profit organizations, or other entities that do not
manufacture or use large amounts of hazardous substances in their
activities and who contributed small amounts of waste to the
site. Such entities may be typical candidates for de micromis
settlements because their activities do not result in generation
or disposal of significant amounts of hazardous substances. A de
micromis settlement may also be appropriate for federal agencies,
or industrial or commercial entities when their contribution for
the site meets the de micromis eligibility test established for a
particular Superfund site. De micromis contributor settlements
are not available to owners or operators of Superfund sites.
A Region can exercise its enforcement discretion to decide
whether to offer a settlement at a site where it is aware of de
micromis parties, particularly in cases where such parties have
been sued or threatened with contribution suits, or it can
determine to resolve a de micromis PRP's liability only when the
party actively requests such a settlement. The Region can then
determine whether to include the de micromis parties in an
existing Section 122(g) de minimis, or other, settlement. The
Region may also enter into an individual settlement with de
micromis parties using the settlement authority under Section
122(g) of CERCLA.
In any de micromis settlement the Agency's goal will be ~J
cash out those settlors at the earliest possible time, consistent
with ensuring that the Agency possesses an adequate basis for ~~e
de micromis determination, thereby safeguarding the positions ~t
all non-settlors. As wi~h any other de minimis settlement, a j.
micromis settlement must involve only-a minor portion of the
total, estimated response costs at the facility concerned.
v.
SETTLEMENT AUTHORITY
A.
Section 122(g)
CERCLA Section 122(g) provides discretionary authority t~
enter .into administrative and judicial de minimis settlement.
with contributors of hazardous substances. To qualify for a
settlement under Section 122(g), the settling party's
contribution of hazardous substances must be minimal in teraa Jf
amount and toxicity in comparison to other hazardous substanc..
at the facility. . In addition, the statute requires that the
settlement involve only a minor portion of the total respon..
costs.
A section 122(g) de micromis settlement will contain an
immediately effective covenant not to sue for past and future
liability at the specific facility. The covenant not to sue
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relates, among other things, to future potential actions that the
Agency could pursue against such parties.) In addition, a de
micromis Section 122(g) settlement would provide the settlor with
contribution protection as set forth in Sections 113(f) and
122(g)(5) of CERCLA.
B.
Deciding Whether to Pursue an Administrative or
Judicial Settlement With De Micromis Parties under
S122(g)
When a Region determines to pursue a de micromis settlement,
the circumstances surrounding that decision will dictate whether
to settle administratively or judicially under S122(g). In
situations where a de micromis party not named in a contribution
action asks the Agency to settle, an administrative settlement
may be preferable because such a settlement typically can be
accomplished more quickly and with fewer transaction costs than a
judicial settlement. However, if a Region is asked to settle
with de micromis parties who have already been named in a
contribution action, the United States may be asked by the court
to join the litigation, or a Region may seek to have DOJ
participate in that action to settle the liability claim., In
such a situation, it is likely that a judicial consent decree
will be the more appropriate settlement tool. Even in such
sftuations, a Region may administratively settle the liability of
a de micromis party.4
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VI.
DE MICROMIS SETTLEMENT PROCEDURES
A.
Ellgibility
De micromis settlements are a subset of de minimis
settlements under CERCLA Section 122(g), and are intended to
encompass only the parties who contributed minuscule amounts of
waste to a site. Therefore, in considering parties for de
micromis settlements, the Region must first be able to make the
Section 122(g) findings required for a de minimis settlement with
respect to those parties. The next step in determining
eligibility is establishing a de micromis volumetric cut-ott,
above which no party could qualify for a de micromis settlement
(although they may still qualify for other settlements).
1/ The present and future liability conc.epts are explained 1 n
the interim guidanceenti tled "Covenants Not to Sue Under SARA'.
(Adams/Porter, July 10, 1987), published at 52 Fed. Reg. 28038
(July 27, 1987).',
1/ See Dravo v. Zuber, No: 8:CV 91-00499 (D. Neb. September g,
1992) (contribution protection effective even though
administrative de minimis settlement was not final at the tIme 4
contribution action was commenced).
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The Region may consider several factors in determining the
eligibility cut-off for PRPs who would qualify as de micromis,
including the settlor's contribution of hazardous substances in
relation to the over-all volume of waste at the site, and the
toxic or hazardous effects of such hazardous substances. We
discuss below some examples of parties whom the Regions might
determine are eligible for de micromis settlements and
circumstances under which the Region might make such a
determination. 5
It must be stressed that determinations to offer de micromis
settlements are discretionary. At a particular site, the Regions
might reasonably decide not to offer any de micromis settlements.
Furthermore, disposal of minuscule amounts of hazardous
substances does not automatically make a party eligible for a de
micromis settlement. The Region should evaluate site-specific
factors in determining whether a de micromis settlement is
appropriate in a given situation.
(1) Sites with similar waste contributions
At sites where the wastes are found to be essentially
similar6 (as may be the case at particular battery cracking,
waste oil recycling, or scrap metal facilities), the Region could
establish a cut-off for de micromis eligibility based simply on
the volumetric waste contribution (e.g., the percentage of the
number of batteries or gallons of waste oil sent by a party as
compared to the total waste at the site). Given the nature of
wastes at these sites and their similar toxicities, a typical de
micromis cutoff would be .001% although this number will vary
based on site-specific factors.
(2) Landfills with contributions of varying toxicity
Another example of sites where the Regions might determine
that parties are eliqible for de micromis settlements is at
landfills containing a municipal solid waste ("MSW") and/or trash
from a commercial, institutional, or industrial entity
7
("industrial trash") component. Wastes at these lan~fills may
~/ There may be other situations where de micromis settlements
may be appropriate.
6/ In this context, similar is intended to signify that waste
contributions are not significantly more toxic than other
contributions at ~he site.
iJ See "Interim Policy on CERCLA Settlements Involving
Municipalities or Municipal Wastes" (Clay, Dec. 6, 1989)(OSWER
Directive #9834.13). 54 Fed. Req. 51071 (Dec. 12, 1989) for the
definitions of "MSW" and "industrial trash."
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vary in toxicity but the MSW and industrial trash contributions
are generally high volume and their toxicities, at most, are
comparatively low. Based on the different nature of MSW and
industrial trash contributions compared to industrial hazardous
substances, it is appropriate for a Region to consider a higher
volumetric cut-off for de micromis eligibility. The Region might
offer a de micromis settlement to PRPs whose contribution of MSW
or industrial trash did not exceed 0.1' of the total waste at
the site. The Region should also take site-specific factors into
account when establishing this volumetric cut-off.
In order to qualify for de micromis tr~atment at these
landfills, parties must show that their contribution to the site
complies with the criteria articulated in the "Interim Policy on
CERCLA Settlements involving Municipalities or Municipal Wastes."
In this policy, the Agency determined that it would generally not
pursue parties who contributed certain types of wastes.
, B.
Timing
The Agency can enter into a de micromis settlement as soon
as it can reasonably determine that a party meets the eligibility
requirements discussed above and the Agency can calculate the de
micromis party's appropriate payment of site costs. De micromis
settlements can be used separately or in conjunction with de
minimis and other settlements. Parties interested in obtaining a
de micromis settlement can contact the EPA Regional Office, or
the Region may volunteer to offer de micromis settlements to a
class of parties at a site.
~
C.
Information
The Region should evaluate the following site information
before offering a de micrcmis settlement: 1) information
regarding hazardous substa8ces sent to the site by the de
micromis party;, 2) the totai estimate of waste at the site; and
3) a reasonable estimate o~ past and future response costs at the
site. To estimate costs, 4 Region can use the procedures
outlined in the June 2, 1992, Methodology for Early De Minimis
Waste Contributor Settlements under CERCLA Section 122(g)(1)(A),
(OSWER Directive #9834.7-1C).
The Region may use a variety of information sources to
determine a party's eligibility for a de micromis settlement.
These sources include: state records, manifests, site records,
canc'eled checks,. waste- in 1 ists, other allocation' ,documents, or
Section 104(e) information request responses. The Region does
not have to produce a waste-in list, even if the information is
available, if the Region has information in its possession to
determin~ the potential settlor is a de micromis party. However,
the Region should use its prepared waste-in list if it is
available. The Region can also use a certification letter and
. ~-'..:-'--',-~ ~''''O~.-
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questionnaire to determine eligibility (models will be provided
in a later memorandum). The certification letter and
questionnaire offer the party an opportunity to describe the
nature and quantity of the materials it sent to the site. The
information from these sources can be used to determine whether
the Region should enter into a de micromis settlement with the
party.
D.
Settlement Amount
As previously discussed, the Region should estimate the
total past and future response costs. at the site to assist in
determining the appropriate payment amount for the de micromis
party. The Region may '\se the payment matrix set forth below to
calculate a de micromis party's settlement amount. The Region
.may also use this format as a model when developing its own site-
"specific matrix. Another alternative is for the Region to
. .establish a standardiz~d payment for everyone in the de micromis
. settlement class at a particular site. Where the Region has more
. . precise information readily available, it is preferable to use
the more specific information to calculate the payment amount. A
party's ability to pay may also. be considered in determining a
set tlement amount. .
~
The matrix uses the mathematical ratio of the party's waste
contribution to the estimate of the total volume of waste at the
site, in proportion to the party's share of payment of the total
estimated site cleanup costs. The waste contribution axis is
stated in terms of a range of volumetric percentages because EPA
and the PRPs.will often not know precisely how much material they
sent to a site. The Region must be reasonably assured that a PRP
sent "no more than" the'-de micromis cut-off established for the
site, based on available information or the PRP's certification.
The Region can convert the PRP's volumetric information to a
common unit of measurement to aid in this payment calculation.8
For example, at a site where site costs are expected to be
up to $10 million and the qualifying PRP's contribution is less
than .001\, a party would have to pay $100 in settlement costs.
The Region can also extrapolate from the figures used in the
!/ Regions can use the following guidance in calculating
equivalent measurements for the party's volumetric information.
(~ee Guidance on Preparinq Waste-In Lists and Volumetric Rankinqs
for Release to Potentially Responsible Parties Under CERCLA,
OSWER Directive No. 9835.16, February 20, 1991)
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matrix where the estimated total site costs or contribution.
9
percentages vary from the following example.
EXAMPLE PAYMENT MATRIX
,
ESTIMATED TOTAL SITE COSTS
VOLUMETRIC
CONTRIBUTION $0 - 10 M $10 - 20 M $20 - 30 M
UP to .00001% $1. 00 $2.00 $3.00
from .00001% to .0001% $10.00 $20.00 $30.00
from .0001% to .001% $100.00 $200.00 $300.00
The example payment amounts in the matrix were calculated by
multiplying the upper limit of the volumetric contribution range
by the upper limit of the estimated total site costs range. This
ensures that the party is paying an appropriate amount relative
to their potential liability, and addresses some of the risk with
settling with parties when we are relying on estimated figures in
this calculation.
.
With respect to settlements involving MSW and industrial
trash contributors, the Region should similarly estimate the
total past and future cleanup costs at the site and the party's
contribution to the site compared'to the total estimated site
volume before determining the appropriate settlement amount for
the de micromis parties. The Region may also take into
consideration the differing nature of MSW contributions in
calculating the payment amount. Among the factors that might be
considered in reducing this payment are the toxicity and mobility
of MSW relative to other types of waste and the cost differential
in addressing MSW-only landfills as compared to mixed-waste
~/
The matrix's figures are based on the following information.
*
On one axis site costs are grouped in ranges to allow
Regioris.a quick way to categorize where' they believe
the pote~tial remedy costs at a site might fall (based
on current information about the site or similar
si tes) .
*
. On the other axis there are volumetric percentages.
. (e.g., 001% of total waste volume.)
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landfills.10 The Region can also take other site-specific
factors into account when calculating the settlement amount.
E.
Premium
The Regions should not assign a premium to the de micromis
settlement amount since our aim is to provide protection to
parties we would not normally pursue. The Agency has determined
that the risk posed to the Agency by site-specific uncertainties
(~, completeness of PRP information, knowledge of future
response costs) is minimal because the de micromis party's share
represents such a minuscule amount of the site's total clean-up
costs. The risk that a party settling on a de micromis basis may
later be determined to have contributed a larger share is
protected through a reopener provision.
The de micromis settlers will not be required to pay a
premium whenever they see~ a settlement with the government.
This approach departs from the typical de minimis settlements
where the Agency often charges a separate premium for parties who
were eligible to settle earlier, b~t enter the de minimis
settlement later in the process. EPA has decided that a premium
payment for persons who enter the settlement late would be
inappropriate for de micromis settlers because the Agency, in
exercising its enforcement discretion, generally would not pursue
these parties.
F.
Contacting De Micromis Settlors
When the Agency initiates a de micromis settlement offer the
Region should consider that the parties may not be familiar with
the Superfund process. ~Most de micromis parties might not see
any practical difference between a demand letter from a settling
PRP and a letter from the government containing an offer to enter
into a de micromis settlement. The potential de micromis settlor
may be unaware of the possibilities of contribution litigation
and any benefits it would receive, such as contribution
protection and reduced transaction costs, by settling with the
government.
Therefore, the site case team should formulate a .
communication strategy before the settlement offer is sent to the
de micromis parties. The purpose of the strategy is to
communicate EPA's actions to public officials, potential de
micromis parties and other PRPs at the site. This procedure
increases fairness, could reduce later settlement. challenges and
may identify issues or additional information that should be
lQ/ We 'are currently developing a payment matrix that
specifically addresses how these factors can be taken into
consideration.
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considered in the settlement offer. Depending on the number of
parties and site-specific circumstances, it may be appropriate
for the case team. to discuss the settlement strategy with
Regional Congressional A.ffairs and community relations personnel.
The case team should develop a communication strategy which
states that the parties are being sent a preemptive settlement
offer rather than a threat of enforcement action, and explains
how the settlement will benefit the de micromis party. The
communication strategy should also state clearly that the federal
government does not intend to pursue bona fide de micromis
parties who decide not to enter into a settlement based on the
current site information. The Congressional Affairs
representative should be given a copy of the draft settlement
offer letter in high-profile cases. In appropriate
circumstances, the case team should consider offering a briefing
to local, state and federal elected officials early in the
settlement process.
The Region should send a simple cover letter (a model will
be provided in a later memorandum) and a non-negotiable
settlement offer to parties potentially eligible for a de
micromis settlement. The letter must be carefully written to
explain the settlement in simple terms. The letter should
emphasize that EPA is merely offering a settlement, that the
government does not intend to pursue the party if the party
rejects the offer and that the settlement terms are non-
negotiable to reduce transaction costs and administrative
expenses. The Region should set a deadline for the settlor to
respond to the settlement offer and explain that the deadline is
to ensure the. settlor will receive timely contribution
protection. The Region should also explain that the party may be
subject to contribution '~ctions brought by parties who have
incurred response costs if it does not enter into the settlement.
G.
Notification of Headquarters and DOJ
The Region.must notify the de micromis coordinators at
Headquarters and DOJ (if the total costs are over $500,000) if
planning to enter into a de micromis settlement. Headquarters
should concur on the first de micromis settlement in each Region
since it is a nationally significant issue.11 Therefore, the
Region should consult with Headquarters and DOJ before offering
its first de micromis settlement. DOJ must approve all de
micromis settlements where total site costs are expected to
exceed $500,000.. Subsequent de micromis settlements will not
require Headquarters concurrence. The Region must. consult with
11/ See, EPA Delegation 14-14-E (De Minimis Settlements) (Sept.
13, 1987). Delegation was modified by "Revision of CERCLA Civil
Judicial Settlement Authorities Under Delegations 14-13-B and 14-
14-E" (Adams/Porter, June 17, 1988).
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Headquarters and then send a copy of the final de micromis
settlement agreements to the de micromis coordinator in
Headquarters.
If the settlement requires DOJ approval, the Region should
forward the referral package prepared f~r the Regional
Administrator (RA) to DOJ. After receiving the proposed
settlement and supporting materials, DOJ will expeditiously
review it; within 30 days of receiving the materials DOJ will
advise the Region whether the settlement is approved. Barring an
agreement to enlarge this time period between the appropriate
Assistant Section Chief from DOJ's Environmental Enforcement
Section and EPA's Regional Counsel, if DOJ does not reject a
proposed de micromis settlement within the 30-day period, the
12
settlement is deemed approved. Headquarters also has 30 days
to review settlement agreements when Headquarters' concurrence is
necessary.
H.
Accepting the Settlement
The party who agrees to settle should send the completed de
micromis settlement forms to the Regional Office. If total site
costs are below $500,000, the Region should informally consult
with DOJ before publishing a Federal Reqister notice of the
settlement according to the requirements specified in CERCLA
Section 122(i). The Regional Administrator should determine
whether to approve the Aoe after the public comment period
expires. If the total site costs are over $500,000, DOJ must
approve the settlement before publishing a Federal Reqister
notice of the, settlement. The Region should send the settlor
notice of the settlement's approval, if approved, after public
comment and give the set~lor 30 days to send in the appropriate
payment amount.
I .
Money Received ln Settlement
Money received ,from :he de micromis settlements should
generally be deposited in the invested portion of the Hazardous
Substance Superfund (Trust Fund.) The money can be used to
reimburse the government tor past costs. It should be noted that
the amount owed by other PRPs for past and/or future costs will
be reduced by the de micromis settlement amounts. In some cases,
the Region may want to set up a site-specific special account so
the funds' can be used for future work to be performed at the
site. It also may be appropriate for a portion of the funds
~I See CERCLA Section 122(g)(4), which provides DOJ thirty days
to review Section 122(g) settlements.
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received to be placed in a PRP-created trust account.13
VII. DE MICROMIS SETTLEMENT PROVISIONS
The de micromis settlement should contain several provisions
that may affect the finality of the agreement. These provisions,
which are described below, include covenants not to sue,
reservation of rights, reopeners, and contribution protection.
A.
Resolution of Liability
De micromis settlements under CERCLA Section l22(g)
(administrative or judicial) will address a party's potential
liability under Sections 106 and 107 and provide the settlor with
an immediately effective covenant not to sue for past and future
liability. EPA intends for de micromis settlements to be a final
resolution of the de micromis party's potential liability, unless
new information shows that the settlor does not qualify as a de
micromis settlor or that the settlor falsified data in its
certification statement or questionnaire. Otherwise, the payment
of the party's de micromis settlement amount should satisfy the
government's potential CERCLA claims against the party for the
Superfund site. The government can reopen the settlement if it
discovers that the party ~s not eligible for the de micromis
settlement.
B.
Reservation of R~ghts
A de micromis settle~e~t under Section l22(g) should cont4in
a reservation of rights .!J~ the following situations: 1)
liability resulting from a settlor's failure to comply.with the
terms of the settlement :e.g., non-payment of money); 2)
liability for natural resource damages (unless the Federal
natural resource trustees ~dve agreed to resolve the party's
liability); 3) criminal :~ability; or 4) future disposal
activities at the site. Furthermore, all de micromis settlement
agreements should state th4t the settlement has no effect on the
Agency's ability to pursue non-settling parties. .
C.
Re-openers
Re-openers should be included only for new information
showing that the settlor does not qualify for a de micromis
11/ See, "Recovery of Costs for CERCLA Response Actions"
published at 57 Fed. Reg. 34742 (Aug. 6, 1992) and "Interim
Cashout Settlement Procedures" (Diamond, Jan. 7, 1992) for
further information on recovering money for the trust fund or
special accounts.
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settlement (~,the waste contributed was materially greater
than originally determined). This situation can arise when the
settlor falsified data in its certification statement or
questionnaire. The reopener will also apply whenever EPA
discovers any information regarding the settlor's waste'
contribution (regardless of whether it was available to the
Agency at the time of the settlement) that establishes that the
settlor sent hazardous substances of a greater volume or toxicity
than that which was identified in the settlement documents. EPA
is not charged with knowledge about a settlor's contribution
where the settlor certifies directly and specifically as to their
waste contribution.
D.
Contribution Protection
The de micromis settlement should contain language that the
settlor receives protection against contribution actions'
(regarding matters addressed in the settlement) to the full
extent provided in CERCLA Section 113(f) and as provided in
Section 122(g)(5).
~
VIII.
PURPOSE AND USE OF THIS GUIDANCE
This guidance and any internal procedures adopted for its
implementation are intended exclusively as guidance for employees
of the U.S. Environmental Protection Agency. This guidance does
not constitute rulemaking by the Agency and may not be relied
upon to create a right or a benefit, substantive or procedura~,
enforceable 'at law or in equity, by any person. The Agency ~4Y
take action at variance with this guidance or its internal
implementing procedures.
IX.
FURTHER INFORMATION
For further information concerning this guidance, plea..
contact Joan Wart Gillespie at (202) 260-3092 in the Office Qf
Enforcement or Gary Worthman 'at (703) 603-8951 in the Office ~t
Waste Programs Enforcement.
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