United States
           Environmental Protection
              Office of
              Solid Waste and
              Emergency Response
TITLE: Policy on Recovering Indirect Cost in CERCLA
     Section 107 Cost Recovery Actions
           APPROVAL DATE: June 27, 1986
           EFFECTIVE DATE: June 27, 1986
           B FINAL
           D DRAFT
             LEVEL OF DRAFT
               DA — Signed by AA or OAA
               D B — Signed by Office Director
               DC — Review & Comment
           REFERENCE (other documents):
 WE Ft       OS WER       OS WER

                           United States Envirc—:--
OSWER Directive initiation Request
                                             1. Directive Number

                                 2. Originator Information
    pme of Contact Person
     avid Van Slyke
        Mail Cod«
  13. Title
       Policy on Recovering Indirect Cost in CERCLA Section 107 Cost Recovery Actions
  14. Summary of Directive (Include brief statement of purpose/                ,    ,.      ^^.jj,,^
  I     This memorandum is a clarification of the Agency's policy regarding
     recovery of indirect costs in CERCLA cost recovery actions..
  15. Keywords
     Indirect Cost, Cost Recovery Actions, Superfund Site Cleanup

  |6a. Does this Directive Supersede Previous Directive^)?  F] Yes   Q No   What directive (number, title)
  |b. Does It Supplement Previous Directive(s)?   Q Yes  [£] No  What Directive (number, title)
  [/..Draft Level

     LJ A — Signed by AA/DAA
    B — Signed by Office Director
For Review & Comment
  [This Request Meets OSWER Directives System Format
  |o. Signature of Lead Office Directives Coordinator
   . Name and Title of Approving Official!
3S WER            OS WER            OS WER
        DIRECTIVE        DIRECTIVE        L

         Attachment XXXII

 Policy on Recovering Indirect Cost
in CERCLA §107 Cost Recovery Actions


    '                 WASHINGTON. D.C. 20460                7OJt r

                         'JUN 27 iSSe


SUBJECT:  Policy on Recovering Indirect Costs
          in CERCLA Section  107 Cost Recovery Actions
FROM:     Frederick F.
          Associate Enforcement Counse

          John J. Stanton, Director
          CERCLA Enforcement Divisi

TO:       Regional Counsels
          Regional Waste Management Division Directors

     This memorandum is a clarification of the Agency's
policy regarding the recovery of indirect costs in CERCLA
cost recovery actions.  Previous memoranda from the Financial
Management Division transmitting yearly indirect cost
multipliers have indicated that indirect costs must be claimed
in all cost recovery actions ("Recovering Indirect Costs
Related to Superfund Site Cleanup," Vincette Goerl to Regional
Financial Management Officers/Regions I - X, December 12, 1985;
"Superfund Indirect _Cost Manual for Cost Recovery Purposes -
FY 1983 through FY 1986 .""Morgan Kinghorn, March 1986).  However,
to avoid disruption of ongoing settlement negotiations with
PRPs in existing CERCLA Section 107 actions, and to avoid
placing the Aeency in an apparently inequitable posture before
the court adjudicating the claim, it may not be appropriate to .
seek indirect costs in all on-going cases.

     The decision whether or not to seek indirect costs in
existing cases will be made by the Regions after consultation
with DOJ and with the concurrence of OECM and OWPE.  The
decision, which will be made on a case-by-case basis, will
depend upon whether EPA has disclosed the overall cost figure
in either negotiations or formal discovery and whether that
figure has been the basis of the parties' settlement
negotiations.  For those cases where no negotiations have
occurred (and therefore the parties have not relied upon a
specific cost figure) , but a cost figure has been produced
during discovery, the litigation team should supplement the
pertinent discovery and seek indirect costs so long as the

                            - 2 -
complaint  (particularly the prayer for relief regarding costs)
is broad enough to include indirect c os t s . / *

     For those cases where indirect costs for past activities
will not be sought (i.e., those cases that meet the criteria
delineated aoove), the Region should notify the defendants at
the next appropriate opportunity, but no later than July 30,
1986, that indirect costs associated with Agency activities
undertaken after that date will be included in the Agency's
demands.  The defendants should also be notified, where
appropriate, that all indirect costs will be sought if the case
proceeds to trial.

     Of course, all new .CERCLA Section 107 referrals must seek
indirect costs.  Accordingly, cost recovery complaints filed in
new cases should include indirect costs as part of the total
amount sought and CERCLA demand letters must include indirect
costs as a portion of the total demand made upon potentially
responsible parties.

     If you have any questions on this policy, contact
David Van Slyke (OECM-Waste)  at FTS 382-3082 or Janet Farella
(OWPE)  at FTS 382-2034 .
cc:  Vincette Goerl ,  FMD
     David Buente, DOJ
     Depending upon the posture of the case, it may be possible to
     amend the complaint to include a request for indirect costs.