United State*
            Environmental Protection
            Agency
Off ic« of
Solid W»«t* and
Emergency Respon*
    &EPA
            DIRECTIVE NUMBER: 9832.2

            TITLE:  COORDINATION OF EPA AND STATE ACTIONS
                 IN COST RECOVERY
            APPROVAL DATE: AUGUST 29, 1983

            EFFECTIVE DATE: AUGUST 29, 1983

            ORIGINATING OFFICE:  OWPE

            ® FINAL

            D DRAFT

             STATUS:

            s

            REFERENCE (other documents):
OSWER     OSWER     OSWER
E   DIRECTIVE   DIRECTIVE  Dl

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6 EPA
United States Environmental Protection Agency
Washington, DC 20460
OSWER Directive Initiation Reauest
Interim Directive Number
9832.2
Originator Information
Name of Contact Person
Anthony Diecidue
Lead Office r— j
D OERR 0
D OSW Q
Title
Coordination of
OUST
OWPE
Mail Code
WH-527
Approved
Telephone Number
382-4841
for Review
Signature of Office Direotor . f
EPA and State Actions in Cost Recoverv
Date ,- ^
\'%&f $ r°

 iummary of Directive
                 Outlines considerations for pronoting  Fed/State relations
                 in their respective cost recovery efforts.   Also provides
                 Guidance on  preparing  conditions  to cooperative agreements.

   Key Words: coordination, cost recovery,  promoting, efforts
                cooperative,  State,  guidance
 ype of Directive (Manual. Policy Directive. Announcement, etc.)
                     Guidance
                                                                      Status
                                                                         Q Draft
                                                                         03 Final
                                                        129  New
                                                        LJ  Revision
Does this Directive Supersede Previous Directives)?   |  | Yes
 "Yes" to Either Question. What Directive (number, title)
                                                 I [ No   Does It Supplement Previous Directive^)?   I .) Yes
 eview Plan
   O AA-OSWER
   D OERR
   D OSW
                 D OUST
                 D OWPE
                 LJ Regions
Q OECM
D OGC
D OPPE
Other (Specify)
 his Request Meets OSWER Directives System Format
ignature of
                  Directives Officer
 ignature of OSWER Directives Officer
                                                  Date
                                                                                    Date

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                                                           vor, = 9332.2
          UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON. OC 20460
                             29 1983

'MEMORANDUM

SUBJECT:  Coordination of EPA and State Actions in CERCLA
          Cost Recovery Negotiations and Litigation

FROM:     Courtney Price ^-
          Special Counsel
          Lee Thomas
          Assistant Administrator
            Solid Waste and Emergency Response

TO:       Regional Administrators, Regions I-X
          Regional Counsels, Regions I-X
          Director, Office of Intergovernmental Liaison


     The clean-up of hazardous waste disposal sites under the-1 -

Comprehensive Environmental Response, Compensation, and Liability

Act (CERCLA) involves payment of monies from the Hazardous Substance

Response Fund (the Fund) created by Section 211 of CERCLA to

individual States or to contractors to finance clean-up activities.

In many cases, the State in which the site is located will also

contribute its own funds to the site clean-up !_/.  EPA and the State

may thereafter negotiate with or take judicial action for recovery

of the.amounts expended by them against the party or parties who
I/   Under CERCLA §104(c)(3), the State must pay or assure payment
of 10 percent of the cost of remedial action and operations and
maintenance at a site and at least 50 per cent of the cost of
all response actions at a facility which was owned by th.e State
or a subdivision at the time of disposal of hazardous substances.

     Current Agency policy allows CERCLA funding of remedial
investigation, feasibility study, and remedial design at privately
owned sites without a State cost-share.  Accordingly, any cost-
share previously paid by the State (allowable State services,
statutory credit or cash) for remedial investigations, feasibility
studies, and remedial design at privately owned sites will he
applied toward the State's share of the cost for remedial construction
at the site, see May 13, 1983 Memorandum from Lee M. Thomas.

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                                       ..                 OSKER = 9832.2



                           .   -2-


are legally responsible 2/.  In those cases, the question arises

whether the separate negotiations or judicial actions of EPA or

the State to recover their respective funds might, in some way,

prejudice the other's right to recoup its monies, and if so,

what actions might be taken to avoid such prejudicial effect.

      It may initially appear unreasonable to conceive that either

EPA or a State could take action which would interfere with the

other's right to recover monies expended for site clean-up.

However, the following points should be considered:

0    State as Agent -   EPA will frequently transfer its share

     of clean-up funds to the State which will,  in turn, spend .

     it on the site under the cooperative, agreement with 'EPA.

     The cooperative agreement contains numerous protocols,

     procedures, and other standards with which  the State'must

     comply to assure the quality of the site  investigation  and

     clean-up.  Because of EPA's control over  these matters,

     adverse parties may argue that the State  is EPA's agent or

     representative for the expenditure of  the funds.  This

     misunderstanding might be asserted as  a defense to  recovery

     of remedial costs by 'a potentially responsible party.
      Further guidance on cost recovery procedure^  and  responsible
parties is contained  in a forthcoming policy entitled,  "Cost
Recovery Actions under CERCLA."

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                             -3-

 •    Collateral Estoppel - An adverse judgment by a court in an

     action by either EPA or a State on the issue of recovery of

     funds expended on the site might be held to collaterally

     estop the other governmental agency from successfully bringing

     a subsequent action against that same party V-

 0    Insolvency of Responsible Party(s) - A settlement or

     judgment by EPA or the State might exhaust the available

     resources of the responsible party(s), leaving the other

     governmental agency without possibility of a recovery.

     Regardless of the merits of arguments which may be made on

the foregoing considerations, in the interest of promoting

Federal-State relations, there are certain rights and obligations

which should be clearly defined at the outset of the relationship.

The Regions,  in cooperation with OERR, have recognized the benefits

of identifying tnese interests by reflecting them in the cooperative

agreements.  Accordingly, this memorandum does not  require the

Regions to adopt any new procedures or change any existing coopera-

tive agreements.  Instead this document .presents the rationale

for drafting cooperative agreements in the manner prescribed by

OERR.
3/   See United States v. I.T.T. Rayonier, Inc., 627 F.2d  996,
(9th Cir., 1980).

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                                                           OSWER =  S£22._

                             -4-



THE COOPERATIVE AGREEMENT

1.   Negation of Agency in Cooperative Agreement

     The cooperative agreement should negate the principle that

the State is an agent for EPA.  This is important for both govern-

mental agencies for a number of reasons.  In the cooperative

agreement, EPA will necessarily require that the State observe

certain standards, procedures and protocols, such as in the

taking of samples, their chain-of-custody, analysis protocols,

and perhaps accounting procedures.  The need to specify such

procedures could be argued to constitute a right to control the

actions of the State, an indicia of an agency relationship.

Neither EPA nor the State should wish to encourage such an

argument because of the potential exposure to tort liability

as well as the possibility 'of complicating a cost-recovery effort.

Therefore, the imputation of an agency relationship between EPA

and the State should be negated by appropriate language in the

cooperative agreement.  Suggested language for such a provision

appears in the Appendix to this memorandum.


2.  Requirement for Notice of Settlement or Action

     The cooperative agreement between EPA and the State should

contain a provision that neither will initiate a cost recovery

proceeding or enter into a settlement with the responsible party

except after ample written notice in advance of the execution of
                                    -r-j-     '.         ,
3, settlement agreement or the filing of a suit.  The provision

prevents rushing by EPA and the State to obtain a judgment against

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                                                          OSKER = 9652.2



                              -5-





 or  settlement  with  the  responsible party,  thereby  gaining



 a position  of  preference with respect  to  the  assets  of  the



 responsible party.



      Inclusion of  such  a provision in  the  cooperative agreement



 is  fair  to  both EPA and the State, in  that neither may  gain an



 unexpected  advantage  to the assets of  the  responsible party by



 separate  negotiations of which  the other may  be  unaware.



      Such a provision also provides  a  means whereby  each party  to



 the  cooperative agreement may take separate independent action



 to  protect  its interests, after having  given  the necessary notice,



 if  there  are reasons  to not engage in  joint EPA^State negotiations



 or  file  suits  in coordination with each other against the



 responsible parties.  Suggested language  for  such  a  provision



 appears  in  the Appendix to this memorandum, and  provides  for



'written  notice not  less than  30 days in advance  of settlement  or



'initiation  of  a cost  recovery action.





 3.    Requirement for Cooperation and Coordination  of

      Cost Recovery  Efforts	.



      The  cooperative  agreement  should  also provide that EPA and



 the  State will cooperate with each other  in efforts  to  recover



 their respective shares of the  costs of response activities at the



 facility, and  will  coordinate their  respective activities  and



 resources in such efforts, including the  filing  and  coordination



 of  litigation  for  the recovery  of costs and the  use  of  evidence


                                 •';*              i
 and  witnesses  in such suits.   This provision  is  aesirable  because  •

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                                                           OSvvZ.-: =  -mi*..-



                             -6-



cost recovery suits will involve considerable data, documents


and witnesses from both EPA, the State and their contractors,


and close coordination between EPA and the State will be very


important to the efficient and effective resolution of those


suits.  Model language for this provision also appears in the


Appendix.



4.   Requirement That Judicial Action Be Taken
     in U.S. District Court


     The cooperative agreement should also provide that any  suit


filed by either party to the agreement.against any third party  for


recovery of response costs to which it may be entitled, shall be


brought in the U»So District Court for the judicial district in


which the release or damages occurred, or in which the defendant


resides, may be found, or has his 'principal office' (§113Cb)).


The purpose of this provision is to avoid fragmenting the efforts


of EPA and the State between Federal court (in which EPA would


bring a suit), and State court -(in which  the State could bring  a


cost recovery suit under any applicable State law.  See  the


discussion of this point in the section entitled  "Pending Cases",


infra).  Model language for this provision also appears  in  the


Appendix.



NON-JUDICIAL SETTLEMENT


     In the absence of 'an agency relationship between EPA  and  the

                                                  i
State, there is little possibility that the State  could  enter  into


a separate agreement with the responsible party  (as  distinguished

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                                -7-


 from a Decree or Judgment)  which  could  affect  EPA's  rights  against

 the responsible party,  other  than to  drain  off  that  party's

 assets which might  be  available  for payment  of  a  cos,t-recovery

 claim.  In the case of  a  responsible  party  with substantial  assets,

 a separate settlement  by  the  State or EPA may  not present a

 serious problem to  the  other  party.   However,  assuming  EPA  becomes

 aware of an impending  settlement  between the State and  the

 responsible party(s) 4/,  the  Agency should,  before the  settlement

 is finalized,  determine the probable  extent  of  the responsible

 party's financial ability to  satisfy  EPA's  claim  in  addition to

 payment of the settlement with  the State 5/.

      In most cases,  the responsible party will  probably wish

 to simultaneously settle, its  liability  with  both  the State  and  EPA.

 Collective negotiation  and  settlement procedures  involving  the
 4/    EPA  should  become  aware  of  any  impending  settlement  by  the
 State with  a  responsible party assuming  there  is  a  provision in
 the  cooperative  agreement which  requires the State  to  notify
 EPA  in writing thirty days  in advance  of any proposed  settlement,
 and  the State complies  with that  agreement.

 £/    A determination of the financial  ability  of  a  potentially
 responsible party  can be made by  the Financial  Management Division
 of the Agency, or  by use of a Financial  Assessment  System which
 has  been  developed  by the Economic Analysis Division of  the
 Office of Policy Analysis of  EPA.  This  system  will provide  case-
 by-case,  inexpensive and defensible  estimates  of  ability-to-pay
 which will  be useful for settlement  consideration.  This  system
 requires  a  minimum of financial  data which will usually  be available
 from a Dun  and Bradstreet report, a  Moody's listing, or  an audited
 financial statement.  When  that  information is  not  available,  the
 system will enable  enforcement personnel to focus data requests
*to that information necessary to  perform a minimum*financial assess-
 ment.  Any  questions about  this  system and  its  uses should be
 directed  to Kathy  Summerlee,  FTS  382-3077, or  David Erickson,
 FTS  382-2764'.

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                              -8-

 .State, EPA,  and the responsible parties should be encouraged

 to avoid misunderstandings 'and to resolve  all issues at  the

 same time.   However, there will undoubtedly be circumstances

 under which  the responsible party may believe that it would

 be advantageous to settle with one claimant (either EPA  or

 the State)  and not the other.   It is those cases where the

 assets of the potentially responsible party would be sub-

 stantially  depleted by the. settlement which could present

 significant  problems for each  claimant.

      It should be recognized at the outset that, absent  the

 proposed notice and coordination agreements discussed above,

 there is nothing to prevent the State or EPA from settling

 its claim in the absence and without the concurrence cf  the

 other.  Where such a settlement would place ei-ther the State

 or EPA in a  more advantageous  position with regard to the.

'assets of the responsible party, problems  could arise which

 could affect intergovernmental relations.   In those cases,

 the following options are available to EPA:

 1.   Should  EPA determine that the State has independently

 ente'red into settlement negotiations with  the responsible

 party, EPA should contact the appropriate  State agency in an

 effort to establish a joint settlement effort and strategy.

 Simultaneously, EPA should notify the responsible party by

 letter (if  that has not already been done  as part of  the  Agency's
                                                 •
 cost recovery procedure), advising it of the Agency's claim, and

 that no other person or entity  is authorized to negotiate  for or

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                               -9-



  otherwise represent the Agency in respect to that claim.



  At the same time,  the Agency should initiate an investigation



  into the financial resources of the responsible party to



  determine whether there will be sufficient assets remaining



  after the proposed State settlement to satisfy EPA's claim.



  That investigation can be carried out in the manner described



  in footnote 5.



  2.   If it is determined that the assets of the responsible



  party will likely  be depleted or substantially impaired by a



  separate settlement with the State without provision being



  made for EPA's  claim,  and if efforts to establish a joint



  settlement effort  with the State are not successful, then



•  consideration should be given to EPA's applying to the appro-



  priate U.-S.  District Court for the appointment of a receiver



  to operate or manage the assets of the responsible party  for



  the benefit of  all creditors of that party.  This action, if



  taken in a timely  manner, would prevent the responsible



  party from distributing its assets in a preferential manner.



       However, the  decision to att -mpt to forestall a State



  settlement with a  responsible party should be made only after



  serious consideration of all factors involved, including:



  0     the amount of EPA's claim which might be prejudiced;



  0     the past relations between EPA and the State agency



       involved in the negotiations;



 *°     the circumstances under which ..fe-he State and t,he



       responsible party entered into the negotiations



       without the presence of EPA;

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                                                        . .OSKER = &55


                             -10-


0    the existence of any agreement between EPA and

     the State prohibiting such negotiations;

0    and any other factors which might bear upon the

     decision.

     While this action should be taken only as a last resort,  -

the Agency's responsibility to preserve and restore the Fund may

require such action.  As in other such actions, a decision to

seek the appointment of a receiver for the assets of a responsible

party will require the concurrence of the Special Counsel to the

Administrator for Enforcement.


PENDING CASES

     There are a number of cases in which States have already

initiated a suit against responsible parties, and-EPA has

contributed or intends to contribute a portion of the clean-up

.costs.  In such cases, what is the proper forum and the best

method in which to proceed?

     In the absence of an agreement with EPA  to the contrary,

a State may, of course, proceed with an action in State court  for

cost recovery claims based upon any applicable State law 6/.
     CERCLA  §107(i) provides:   "Nothing  in  this  paragraph  shall
affect or modify in any way  the obligations  or  liability of  any
person under any provision of State  or Federal  law,  including
common law,  for damages,  injury or loss  resulting  from a release
of any hazardous substance or for removal or remedial  action or
the costs of  removal or remedial action  of  such  hazardous
substance."

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                                     • *                   GSVEP. - 9c32
                             -11-


     States are also authorized to make claims under CERCLA for

the cost of response activities which they incurred at a  site.

Section  107(a) of CERCLA, for example, provides for the liability

of past and present owners and operators of a facility, generators,

transporters and others for "all costs of removal or remedial

action incurred by the United States or a State not inconsistent

with the National Contingency Plan."  Many other sections of

CERCLA refer to the right of the States to recover for their own

costs.


     However, §113(b) of CERCLA provides:

     "... the United States district courts shall have exclusive-
     original jurisdiction over ail controversies arising under
    .this Act,  without regard to the citizenship of the parties
    •or the amount in controversy.  Venue shall lie in any dis.trict
     in which 'the release or carnages occurred, or in which th«?
     defendant resides, may "be found, or-has his principal office."

     We interpret this provision to mean that any claim made

by EPA, the State or any other person.for recovery of response

costs, which is based upon the provisions of CERCLA, must be

brought in the appropriate U.S. District Court, and may not

be asserted on behalf .of EPA by a State in a State court

action !_/.  Obviously, any claim asserted by EPA will be  based

upon CERCLA and will be in U.S. District Court.  Likewise, if
7/   In addition to the restriction of §113(b), there are additional
Feasons why the State could not attempt collection of the Federal
share of response costs.  Under CERCLA §112(c)(3) and 28 USC  S516,
the U.S. Attorney General is requiced to represent EPA  in these
proceedings.  This may not be delegated to the States,  and  therefore
it is not possible to authorize the States to attempt collection
of the Federal share of response costs in a State court proceeding,
even should it be otherwise appropriate.

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                             -12-


the State's claim against a third person for its share of the

costs relies in whole or in part upon CERCLA, then it too must

be brought in U.S. District Court.  A State may, therefore,

attempt recovery of its share of response costs in State

court only under some law or theory other than CERCLA.

    We also believe it highly important that EPA and the State

attempt to coordinate their respective claims because:

*    such actions will involve a substantial amount of technical

     data, documents and witnesses from both EPA and the State,

     and each party could derive the benefit of the other's

     evidence and witnesses;

0    coordination would avoid .the necessity of maintaining two

     separate proceedings which would duplicate much of the same

     effort and resources; and

0    coordination of the claims would avoid the issue of collateral

    "estoppel discussed earlier in this memorandum.

We believe the States will be receptive to joint or cooperative

cost recovery actions with EPA for these rea.sons, and for the

additional reason that the legal authority for the States to

recover is probably much clearer under CERCLA than it may be

under the laws of most States.

     The following options, or some variance thereof, should

therefore be followed in those cases where EPA provides CERCLA
                                                      i

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                                                         OSwER = 9832.2

                             -13-

 funds  under a cooperative agreement to a State which has a suit

 pending  in State court against t-he responsible party:

 Option I;   EPA should require, as a condition of'payment of

 the CERCLA funds to the State, that the State will, within a

 certain  period of time (i.e., 30 days) after receipt of the

 funds, dismiss without prejudice all claims for recovery or

 reimbursement of any response costs at the site £/  from any

 action then pending in State court.  The provisions recommended

 earlier  in this Memorandum for inclusion in all cooperative

 agreements should also be used _9/.

     It  is not necessary to require that a single suit for cost

 recovery be filed jointly by EPA and the State.  It may.be a

 more simple' procedure, and avoid potential logistical problems, •

 for -each party to file its own-suit separately,•and then request
8/   Note that this does not necessarily require a complete
dismissal of the pending State court action.  This recognizes
that there may be other claims of the State involved  in  the
case, with which the State may wish to continue in the State
court proceedings, and that the existence of counterclaims by
the defendant on other issues may prevent the State from
effecting a complete dismissal of the case.  The important
poirtt is to eliminate all cost recovery claims from the
State court proceedings.  Of course, if those are the only
claims involved in the State case, a complete dismissal  of
the case would be the desired result.

£/   The Attorney General of the State should agree to or
concur in this provision of the cooperative agreement, since
it affects pending litigation in which the Attorney General
is representing the State.  Such .agreement or concurrence may
be limited to the particular provision requiring dismissal of
the case, and may be evidenced by an endorsement to the
cooperative agreement or by separate letter signed by the
Attorney General or his representative.

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                                                         UbtM-T'v = :?Cw-.-





                              -14-






 the  U.S*  District  Court  before  which  they are pending  to consoli-



 date proceedings on  the  suits pursuant  to Rule  42 of the Federal



 Rules of  Civil  Procedure.



      Note also  that  this option does  not affirmatively require



 that the  State  refile  its claim in  Federal  court, but only



 that if  the  claim  is refiled, it will be in Federal court.  The



 requirement  for cooperation  and coordination between EPA and



 the  State will  also  apply to and encourage  joint negotiations



 with the  responsible parties before filing  of a suit in Federal



'court, as well  as  to subsequent litigation  in-Federal  court.



 Option II;    It is  conceivable that  a  State may wish  to continue



 to.pursue its cost recovery  claim  in  State  court, or may not



 wish to coordinate its efforts  with EPA.   In such event, EPA



 should not,  even if  it could, attempt to require  it  to  do  other-



 wise.  However, because  collateral  estoppel could be raised



 against EPA  by  the responsible  party(s) in  event of  an unfavorable



 result in State court  proceedings,  EPA  should,  as a  condition



 of payment of the  CERCLA funds, require that the State,



 within a  specified time, dismiss without prejudice or  omit



 from any  action then pending or which it may subsequently



 file in State court  any claim for  recovery  of  response costs



 which in  the opinion of  EPA, are or may be  based upon  CERCLA,



 or any law,  regulation or authority other  than  that  which



 may  exist under the  laws of  that State  10/.     «
 10/  See comment at footnote 9

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                                                         OSVEE F


                             -15-


     EPA should strongly urce the States with which it enters


 into cooperate agreements to accept Option I, since it will


 result in much greater effectiveness and cost-efficiency in


 recovery actions.  Option II should be adopted only after


 all efforts to persuade the State have failed.



 Note on Purpose and Use of this Memorandum


     The policy and procedures set forth herein, and internal


 office procedures adopted pursuant hereto, are intended solely


 for the guidance of attorneys and other employees of the U.S.


 Environmental Protection Agency.  They are not intended to nor


 do-they constitut-3 rule-making by the Agency, and may not be


 relied upon to create a right or benefit, substantive or pro-


 cedural,  enforceable at -law or in equity, .by any person.  The


Agency -may -ake any action at varience with the policies or


procedures contained in this memorandum, or which are not in


compliance with internal office procedures that may be adopted


pursuant  t  these materials.


     We recognize that this memorandum contains subject


matter which relates to sensitive areas of the Federal-State


relationship.   Nothing contained herein is intended to imply


bad faith or improper motive on the part of any State or


agency thereof, and no such interpretation or construction of


any provision herein should be made.  This memorandum attempts  to


recognize that in the normal course of EPA-State relations,
                                .-«•     .    •     ,

occasions arise in which the interests of EPA and the State may


not be identical, and it is our intent to anticipate and

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                             -16-





prepare for such occasions so that they can be approached in



a rational, planned manner to minimize further potential



i-paet on the relationship.



     If you have any questions or problems concerning any matter



contained herein, please call Russell B. Selman at FTS 426-7503,,





Attachment

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                            APPENDIX


      Under CERCLA,  both EPA and affected States can institute
 enforcement actions against and/or  negotiations with parties
 responsible for priority waste sites.   When'this occurs,  a
 settlement or legal action by either  party could potentially
 impede or even negate *:he claims of the other  for rece"^ry ~*
 funds expended at the site.  Obligations,  rights, and pro-
 cedures for litigation must be defined as  early as possible
 in the working relationship between EPA and the State to  avoid
 this eventuality.  Therefore, provisions concerning cost  recovery
 should be in the Cooperative Agreement application.  Specific
 provisions that address different enforcement  conditions  are
 presented below.  These provisions  should  be reviewed,  discussed
 with the RSPO, and  included in the  application, as appropriate.
 Please refer to the text of the Memorandum for guidance on
 the use of these provisions.

 1.   Disclaimer of  Agency Relationship

      Nothing contained in this Agreement shall be construed to
 create, either expressly or by implicaation, the relationship
 of agency between EPA and the State.   Any  standards, procedures
 or protocols prescribed in this Agreement  to be followed  by
 the State during the performance of its obligations under this
 Agreement are for.assurance of the  quality of  the final product
 of"the actions contemplated by this Agreement, and do not
 constitute a right  to control the actions  of the State.  EPA
 (including its employees and contractors)  is not authorized to
 represent or act on behalf of the State in any matter relating
 to the subject matter of this Agreement, and the State (including
 its employees and contractors) is not  authorized to represent or
 act on behalf of EPA in any matter  related to  the subject matter
 of this Agreement.   Neither EPA nor the State  shall be liable
 for the contracts,  acts, errors or  omissions of the agents,
 employees or contractors of the other  party entered into,
 committed or performed with respect to or  in the performance
 of this Agreement.

 2.   Notice of Intent to Settle or  Initiate Proceedings

      EPA and the State agree that,  with respect to the claims
 that each may be entitled to assert against any third person
 (herein referred to as the "responsible party", whether one or
 more)  for reimbursement of any services, materials, monies or
 other  thing of value expended by EPA or 'the State for response
(activity at site described herein,  neither ERA no» the State
 will enter into a settlement with or  initiate  a judicial  or
 administrative proceeding against a responsible party for the

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                           Appendix
                              ii
recovery of such sums except after having given notice in
writing to the other party to this Agreement not less than
thirty (30) days in advance of the date of the proposed
settlement or commencement of the proposed judicial or
administrative proceedings.  Neither party to this Agreement
shall attempt to negotiate for nor collect reimbursement of
any response costs on behalf of the other party, and
authority to do so is hereby expressly negated and denied.

3.   Cooperation and Coordination in Cost Recovery' Efforts

     EPA and the State agree that they will cooperate and
coordinate in efforts to recover their respective costs of
response actions taken at the site described herein, including
the negotiation of settlement and the filing and management
of any judicial actions against potential third parties.  This
shall include coordination in the use of evidence and witnesses
available to each in the preparation and presentation of any
cost recovery action, excepting any documents or information
which may be confidential under the provisions of any applicable
State or Federal law or regulation.

4.   Judicial Action in U.S. District Court

     EPA and the State agree 'that judicial action taken by
either party 'against a potentially responsible party pursuant
to CERCLA for recovery of any sums expended in response
actions at the site described herein shall be 'filed in the
United States District Court for the judicial district in
which the site described in this Agreement is located, or in
such other judicial district of the United States District
Courts as may be authorized by section 113 of CERCLA, and
agreed to in writing by the parties of this Agreement.

5.   Litigation Under CERCLA Sections 106 and 107

     The award of this Agreement does not constitute a waiver
of JEPA's right to bring an action against any person or persons
for liability under sections 106 or 107 of the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA),
or any other statutory provision or -common law.

6.   Sharing Recovered Funds with EPA

     Any' recovery achieved by thetyState pursuant? to settlement,
judgment or consent decree or any action against any of the
responsible parties will be shared with EPA in proportion to
contribution to the site cleanup under CERCLA.

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7.
                           APPENDIX
                               iii


     Dismissal By State of Pending Cost Recovery Action - Option I

     The State does hereby agree that if will, not later than
 thirty  (30) days after the date of this Agreement,"cause to be
 dismissed, without prejudice to any subsequent refiling, any
 and  all claims of the State  (or any Agency thereof) in the
 case of "(State or Agency) v.  (defendant), now pending in the
 (Circuit, Chancery, etc. ) Court of 	,
 Docket No. 	, for recovery of any services, materi-als,
 monies or other thing of value expended or to be expended on
 the  site described in this Agreement.  Any subsequent refiling
 of said claims by the State or any agency thereof will be in
 accordance with the provisions of this Agreement.

 (See comment at footnote 9 of Memorandum regarding State
 Attorney General concurrence with this provision.)

 8.   Dismissal By State of Pending Cost Recovery Action - Option II

     The State does hereby agree that it will, not later than
 thirty (30) days after the date of this Agreement, cause to be  .
 dismissed,  without prejudice to any subsequent refiling, any and
 all claims of the State (or any Agency thereof)  in the case of
 "(State or Agency) v. (defendant), now pending in the Docket No;
	,  for recovery of any services, materials, monies or
 other thing of value expended or to be expended on the site
 described in'this Agreement which are based or rely, in whole
 or. in part,  upon the provisions of the Comprehensive Environmental
 Response,  Compensation, and Liability Act of 1980. .Any subsequent
 refiling of said claims by the State will be in accordance with
 the provisions of this Agreement.

 (See comment at footnote 9 of Memorandum regarding State
Attorney General concurrence with this provision.)

 9.   Emergency Response Action

     It may in the course of conducting the remedial activities
 covered by the Cooperative Agreement, become necessary to
 initiate emergency response actions at the site.  The Cooperative
Agreement application should contain a provision acknowledging
 this eventuality and dealing with the effect any such emergency
actions will have upon the remedial project.  The provision
 below,  or its equivalent,  may be used in the application for this
purpose:

          Any emergency response activities conducted
          pursuant to the National Contingency Plan,
          40 CFR section 300.65, shall not be restricted
          by the terms of this Agreement.  EPA and the
          State' may jointly suspend or modify the remedial
          activities in the SOW of this Agreement during
          and subsequent to necessary emergency response
          actions.

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