United States
Environmental Protection
Agoncy
Solid Waste and
Emergency flesoonse
4>EPA
DIRECTIVE NUMBER: 9832.11
TITLE: Guidance on Documenting Decisions not to Take
Cost Recovery Actions
APPROVAL DATE:
EFFECTIVE DATE:
ORIGINATING OFFICE:
(3 FINAL
D DRAFT
LEVEL OF DRAFT
DA — Signed by AA or OAA .
S3 B — Signed by Office Director
DC — Review & Comment
REFERENCE (other documents):
Office of Waste Programs
Enforcement
S WER OS WER OS WER
DIRECTIVE DIRECTIVE Dl
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United States environmental Protection Agency
Washington. DC 20460
OSWER Directive Initiation Request
1. Directive Number
9832.11
2. Originator Information
Name of Contact Person j Mail Code jCffice
Carolyn Me Avoy/Lori Tripoli j WH-527 I OWPE
iTefepnone Coce
! (202)475-6771
3. Title
Guidance on Documenting Decisions not to Take Cost Recovery Actions
4. Summary of Directive (induce onef statement of purpose)
Guidance provides information to Regional Superfund personnel on the content of
memoranda that document a decision not to pursue an action for recovery of
unreimbursed Hazardous Substances Superfund monies.
5. Keywords
6a. Does This Directive Superseae Previous Oirective(s)?
b. Does It Supplement Previous Oirective(s)?
T n
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
SOLID WAS" AND =M = 3GsMCv ^ESPQi'i'S
OSWER Directive No. 9832.11
JUN 7 -
MEMORANDUM
SUBJECT: Guidance on Documenting Decisions not to Take Cost
Recovery Actions
.
FROM: Jonathan z^vfewmbn, Acting Director
Office of Waste Programs Enforcement (OWPE)
TO: Addressees
PURPOSE
This 'document is intended to provide information on the
content of close-out memoranda which should be written for each
site where the Agency does not intend, on the basis of certain
information, to pursue an action for recovery of unreimbursed
Hazardous Substances Superfund (Fund) monies.
BACKGROUND
Pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (CERCLA) ,
the Agency is charged with management of the Fund. Fund monies
expended in response to releases or threatened releases of
hazardous substances are fully recoverable pursuant to §107 of
CERCLA as long as response actions conducted were not
inconsistent with the national contingency plan (NCP) .
Because of the Ac,
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OSWER Directive No. 9832
cost recovery are reflected in referrals and settlements.
Decisions not to proceed with cost recovery efforts are to be
documented in close-out memoranda. Determinations not to pursue
cost recovery are important for satisfying EPA management's
accountability for cost recovery on a site by site basis.
Additionally, by documenting which cases will not be pursued, the
close-out memoranda will aid in planning referrals and projecting
revenues to the Fund in future years.
PRE-DECISIONAL ACTIVITIES
In removal actions where time permits and in remedial
actions, the Regions generally will conduct a PRP search and seek
to have the PRPs undertake the clean-up prior to funding a
response action. PRP searches that are not essentially complete
when the response starts are completed during or after the
federally-funded action. While the primary purposes of a PRP
search are to identify PRPs who may be induced to perform work
and to provide evidence for cost recovery lawsuits, PRP searches
also form a basis for determining not to pursue a cost recovery
action. For example, it may form a basis for not filing where
PRPs cannot be identified, where the evidence linking possible
PRPs to a site is very tenuous, or where PRPs are not viable.
TIMING OF THE MEMORANDUM . .
CERCLA §113 establishes the statute of limitations for
recovery of post-SARA response costs.1 The statute of
limitations provision, which was added by SARA, applies only to
those response actions initiated after the effective date of
SARA. To minimize opportunities for challenges in litigation,
however, the Regions should operate as though the SARA statute of
limitations applies to all removal and remedial actions, and plan
the referral of viable cases consistent with that assumption.
V CERCLA §113 states. "An initial action for recovery of
costs referred to in section 107 must be commenced—(A) for a
removal action, within 3 years after completion of the removal
action, except that such cost recovery action must be brought
within 6 years after a determination to grant a waiver under
section 104(c)(1)(C). for continued response action: and (B) for a
remedial action , within 6 years after initiation of physical on-
site construction of the remedial action, except that, if the
remedial action is initiated within 3 years after completion of
the removal action, costs incurred in the removal action may be
recovered in the cost recovery action brought under this
subparagraph."
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3 OSWER Directive No. 9832.11
When to prepare a cost recovery close-out memorandum will
depend upon the specifics of the case. Normally, the decision
not to pursue cost recovery should be made some time after the
case would be "ripe" for referral of a judicial action for cost
recovery.^ The close-out memorandum may be prepared and signed
as soon as the Region is reasonably sure that information
developed later will have no bearing on viability of a cost
recovery action. For example, if a thorough PRP search is
conducted prior to the commencement of a federally.funded
remedial design but no viable PRPs are found, a cost recovery
close-out memorandum may be prepared while the remedial design is
underway. If there is a settlement for less than all costs and
the Region does not intend to recover the remaining costs (e.g.,
where there are no viable PRPs), this must be addressed in the
ten point settlement analysis (if known at that time) or a
separate close-out memorandum. Of course, signing of a close-out
memorandum does not extinguish or compromise any cost recovery
rights of EPA and does not foreclose the Agency from re-opening
the case in the event additional parties are discovered, new
evidence is developed, or any other reason. Moreover, to
facilitate planning of referrals and projections of revenues, it
is advantageous to close out cases as soon as possible. In any
event, the memorandum must be .prepared prior to the relevant real
or potential statute of limitations date.
CONTENT OF THE MEMORANDUM .DOCUMENTING A DECISION NOT TO PURSUE
COST RECOVERY ' .
If all available enforcement information on a site points to
a recommendation not to pursue cost recovery, a close-out
memorandum should be written by the staff program person assigned
to the case and, where legal issues are involved, in consultation
with the Office of Regional Counsel. The memorandum must be
signed by the program division director (in most regions this is
the Waste Management Division Director). The Memorandum and its
supporting documents (e.g., the PRP Search Report, the Action
Memorandum) should be placed in the permanent site file but
should remain confidential since enforcement discretion is
involved. As an enforcement confidential document, the
memorandum is not available under the Freedom of Information Act.
The memorandum should not be included in the administrative
record.
2/ As noted in the June 12, 1987 guidance "Cost Recovery
Actions/Statute of Limitations", OSWER Directive No. 9832.3-1A,
removal actions are ripe for referral of a judicial action
immediately following completion of the action. Remedial sites
become ripe for referral of a judicial action concurrent with the
start of the remedial action.
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OSWER Directive No. 9832
The memorandum should include four sections: A. Site
Description; B. Work Conducted and Associated Costs;
C. Discussion of Basis not to Pursue Cost Recovery; and D.
Conclusion.
A. Site Description. This section should briefly identify the
site and its location, and the EPA identification number (12-
digit EPA ID #). It should very briefly describe the
environmental condition of the site. References to an Action
Memorandum or Remedial Investigation/ Feasibility Study Report
should be utilized to keep the memo brief.
B. Work Authorized and Conducted and Associated Costs. This
section should briefly describe the action(s) taken by EPA (or a
state under a cooperative agreement or a contractor) on the site
and the initiation and completion date of the response action(s)
taken. In addition, this section should provide an estimate of
the amount of money spent or expected to be spent for all past
and future response actions..
This section should also note any previous settlement(s)
(whether for work or cost recovery) and the dollar value of the
settlement(s). \
C. Discussion of Basis not to Pursue Cost Recovery. This
section should include the information that leads the Division
Director to the conclusion that further cost recovery efforts
should not occur. The memorandum must clearly state the reason
that the decision was made not to pursue cost recovery at the
site. Possible reasons include:
1) No PRPs were identified for the site. The potentially
responsible party search report or other documentation of the
completed PRP search effort should be referenced.
2) The PRPs identified in the PRP search are not financially
viable. A written evaluation of the ability of any identified
PRPs to satisfy a judgment for the amount of the claim or to pay
a substantial portion of the claim in settlement should be
conducted during the PRP search.3 The close-out memorandum
should reference the results of the evaluation.
i
3) The available evidence does not support one or more essential
elements of a prospective case and there is no reason to believe
that such evidence can be discovered or developed in the future.
3/ The Potentially Responsible Search Manual, (OSWER
Directive No. 9834.6) provides information on how to go about
collecting information on the financial status of companies and
individuals.
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OSWER Directive No. 9832.11
See the August 26, 1983 guidance document on Cost Recovery
Actions Under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (OSWER Directive No.
9832.1) for a further discussion of the essential elements of a
cost recovery action.
4) The legal case is so questionable that cost recovery should
not be pursued. The close-out memorandum should identify what
legal issues (e..g. . statute of limitations) would impair
successful cost recovery efforts.
5) The Agency lacks resources to pursue the case. This reason
may only be used for those sites where total costs of response at
the site do not exceed two hundred thousand dollars and
settlement efforts have been exhausted. Some- actions will be
filed where expenditures are less than $200,000. While such
small cases should not automatically be closed out for this .
reason, some may have to be. For example, resources for very
small cases for cost recovery efforts beyond the issuance of
demand letters may not be available prior to the expiration of
the statute of limitations. Sites closed out solely on this
basis should not be closed qut until it has been determined that
there will not be resources to pursue an action prior to the
expiration of the statute of limitations.
6) Other reasons. There may be reasons, not identif-ied above,
that form the basis for making a decision, not to pursue cost
recovery (or further cost recovery) at a particular site. One
example is the existence of an agreement by the PRP(s) (in the
form of a consent order or decree) to conduct the response
action(s) approved by EPA. While the Agency may not have waived
explicitly in the settlement some or all of oversight costs
incurred, the Agency may decide later not to pursue those costs
because the PRP(s) has been cooperative in agreeing to conduct
work.4 In this example, if there are non-settlors, the close-out
memorandum must analyze the case against them based upon the
factors delineated above. A low dollar threshold does not
necessarily apply to a case where there are recalcitrant non-
settlors.
Each ciooe-out memorandum prepared must contain at le-ijc one
of the above reasons but should contain all the reasons that
exist.
D. Conclusion. The conclusion should restate the amount of the
total response costs expended or projected for the site not
4/ See the Interim CERCLA Settlement Policy,
December 5, 1984, OSWER Directive No. 9835.0.
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6 OSWER Directive No. 9832
previously recovered. It should also restate the basis for not
pursuing cost recovery at the site.
NEW INFORMATION In the event that a Cost Recovery Close-Out
Memorandum has been signed and new relevant information comes to
light, the case should be re-examined to determine whether the
decision not to proceed with cost recovery efforts is still
valid. Factors to be reviewed included the total dollar amount
of funds expended or to be expended; the relevant statute of
limitations date; and the changes to the strength of the case
resulting from the new information.
REPORTING REQUIREMENTS
OWPE is incorporating reporting "requirements for cost
recovery close-out memoranda into the CERCLIS system. Guidance
on using the system to report the information contained in the
close-out memoranda will be issued in the future.
CONCLUSION
Close-out memoranda are necessary for EPA -to effectively
manage the Hazardous Substance Superfund. In order to
effectively budget future Fund actions, EPA must know which sites
have unrecoverable costs associated with them. The close-out
memorandum discussed in this guidance will provide the Agency
with a means of tracking those sites .with no potential for return
and allow them to be removed from consideration for further cost
recovery action. If you have any questions concerning this
guidance please contact Carolyn Me Avoy of the Guidance and
Oversight Branch, OWPE, at FTS 475-8723.
Addressees: Directors, Waste Management Divisions
.Regions I, IV, V, VII, VIII
Director, Emergency and Remedial Response Division
Region II
Directors, Hazardous Waste Management Divisions
Regions III, VI
Director, Toxics and Waste Management Division
Region IX
Director, Hazardous Waste Division
Region X
Directors, Environmental Services Divisions
Regions I, VI, VII
cc: Regional Counsel, Regions I-X
Regional Counsel Waste Branch Chiefs, Regions I-X
Superfund (Enforcement) Branch Chiefs, Regions I-X
Superfund (Enforcement) Section Chiefs, Regions I-X
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Unit«d States
Environmental Protection
OHice of
Solid Waste and
Emergency Hesoonse
&EPA
DIRECTIVE NUMBER: 9832.11
TITLE: Guidance on Documenting Decisions not to Take
Cost Recovery Actions . .'•';'
APPROVAL DATE: 6/7/88
EFFECTIVE DATE: 6/7/88
ORIGINATING OFFICE:
Q FINAL
Q DRAFT
LEVEL OF DRAFT
DA — Signed by AA or DAA
• G3 B — Signed by Office Director
Q C — Review & Comment
REFERENCE (other documents):
Office of Waste Programs
Enforcement
S WER OS WER OS WER
DIRECTIVE DIRECTIVE Dl
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