Unued States
Environmental
Agency
u ;>ce ot
Sona /Vas'e and
Emergenc/ Response
&EPA
DIRECTIVE NUMBER
TITLE: Tv_0 n,,.r_
^ \ T- ^ O ' / ^ _' ( r
9834.7
o>'
Thomas L. Adams /J. Winston
Porter
WASTE CONTRIBUTORS UNDER SECTION 122 (g) OF
SARA
APPROVAL DATE: June 19) 1987
EFFECTIVE DATE: JuM 19> l587
ORIGINATING OFFICE:
Q FINAL
D DRAFT
LEVEL OF DRAFT
C3 A — Signed by AA or OAA
Q B — Signea by Office Director
Q C — Review & Comment
REFERENCE (other documents):
S WER OSWER OSWER
DIRECTIVE DIRECTIVE Dl
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Unued States
Environmental
Agency
u ;>ce ot
Sona /Vas'e and
Emergenc/ Response
&EPA
DIRECTIVE NUMBER
TITLE: Tv_0 n,,.r_
^ \ T- ^ O ' / ^ _' ( r
9834.7
o>'
Thomas L. Adams /J. Winston
Porter
WASTE CONTRIBUTORS UNDER SECTION 122 (g) OF
SARA
APPROVAL DATE: June 19) 1987
EFFECTIVE DATE: JuM 19> l587
ORIGINATING OFFICE:
Q FINAL
D DRAFT
LEVEL OF DRAFT
C3 A — Signed by AA or OAA
Q B — Signea by Office Director
Q C — Review & Comment
REFERENCE (other documents):
S WER OSWER OSWER
DIRECTIVE DIRECTIVE Dl
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Was- ngton ZC 20-560 I
"T*~ CSWEn Cireciive initiation Reauesi -
2 Originator Information
Name c' Cor'aci Person
Cachv Chovan
1 INTERIM GUIDANCE ON SETTLEMENTS WITH DE DEMINIMIS WASTE CONTRIBUTIONS CYDER
SECTION 122(g) OF SARA
Surr-"an/ ci _,rec'i e "Ciuce or ei s 2 e'—er' 3! ourocse)
PURPOSE OF THIS !E::OR~NDL~M IS TO PROVIDE INTERIM GUIDANCE FOR DETERIMI/G vITH ??.PS
OUILIFY FOR TREATMENT AS DE MINIMIS WASTE CONRI3UTORS PURSUANT TO SECTION 122(g)(l)U> '
OF THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF L986 ("SARA") PU3 L.N099—99, ]
AND TO PRESENT INTERIM GUIDELINES FOR SETTLEMENT WITH SUCH DE MINIMIS PARTIES PIRSUANT»
TO -§<:2'g) -f
5 Ke/v/orc3S
L22(g) of SARA, De Minimis, PRP
5a Does This Direc i/e Suoerseae Previous uirecti.e(s)':)
o Does It SLppiement Orevious
X No
X I No
Yes What directive (numoer t tie)
Yes What directive (numoer title)
A - Signed by AADAA
3 • Signed by Office Director
C - For Review & Comment
0 - In Development
8. Document to be distributed to States by Headquarters?
X
Yes
No
This Request Meets OSWER Directives System Format Standards
9 Signature o' Leaa
A^^f^-
10 Name and Title o
C"ice Directives Coordinator
LX-^v A ^rTrE-T*-
' Aooroving Of ic al
Gate
Date
EPA Form 1315-17 (Rev 5-87) Previous editions are obsolete
OSWER OSWER OSWER O
VE DIRECTIVE DIRECTIVE DIRECTIVE
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9834
UNfTED STATES ENVIRONMENTAL PROTECTION AGENCY
vVASHINGTON D C 20460
JJN 191987
MEMORANDUM
SUBJECT Interim Guiaance on Settlements with _D_e Kinimis
Waste Gorier ibucors unaer Section I22(g) or SARA
FROM Thoras L. Adams, Jr.£v
Assistant Admints cracor for Enforceiaen c
and/ Com pi 1 27icfi__Mon L cor ing
^
J. WThs co nx Porter
Assiscant Ad~ in LS tratcr for 3olid Wasc-3
and Emergency Response
TO- Regional Administrators
Regional Counsels
Regional Waste Management Division Directors
I. PURPOSE
The purpose of this memorandum is to provide interim
guidance for determining which PRPs qualify for treatment as
d£ minimis waste contributors pursuant to Section 122(g)(1)(A)
of the Superfund Amendments and Reauthori zation Act of 1986
("SARA"), PUD. L. No. 99-499, ana to present interim guidelines
for settlement with such de minimis parties pursuant to Section
122(g) of SARA.' Guidance on d_e minimis landowners under Section
122(g)(1)(B) of SARA will be provided by separate memorandum.
II. BACKGROUND
When the harm is indivisible, generators and transporters
of hazardous substances disposed of at a facility are strictly
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and jointly ana severally liaoie for all coses of removal or
re^ea'.d^ a^c.o^ .r.carrec DV cr.e I'nizea Scares unaer Section
107(a) of ens Comprehensi/e Environmental Response Co'nper'sa-
z-c- --a T_-.soi_ic/ .-c- or c,'j ; CirluLA") -2 U.5.C. ';bJ7(a;
as arended by SARA. Alchougn this liability LS not scacucorily
limited by trie amount or tyoe of Hazardous substance generated
or transported to the facility Congress in Section 122(g)(1)(A)
of SARA, recognized the concept of.the d_e minim is waste contri-
butor, i.e., the potentially responsible party ("PRP") who
satisfies the requirements for liability under Section 107(a)
of CERCLA and who does not have a valid Section 107(b) defense,
but who has made only a minimal contribution (by amount and
toxicity) in comparison to other hazardous substances at the
site.
Since the oeginning of the Superfund program, the Agency
has been faced with the problem of how to treat de minimis
contributor PRPs. The legal fees and other transaction costs
of negotiating and litigating with the Government, compounded
by the potential costs of asserting and defending claims for
contribution with other PRPs at the site, often could exceed
the amount such minimal contributors would be expected to pay,
even under a settlement or a judgment unfavorable to them.
As a result, d_e minimis parties often seek a swift and efficient
means to pay a sum that is commensurate with their involvement
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C Q 7
at the si.ce and allows cnem co De dismissed from furcher nego-
ciac-cns ana Irrigation. Tne Agency also neecs a ziechoa for
acnieving secclemencs wirh oiir.iTial waste concrioucors in order
co nake negociacions anc J.L c ^gac ion more manager le.
EPA formally recognized and endorsed che concept of cne
de Tinimis concnoucor secclenenc in cie Incerin CERCLA Seccle-
menc Policy ("Secclemenc Policy"), 50 Fed. Reg. 5034 (Feb. 5,
1985). The Settlement Policy advised that negotiations with
de minimis parties should focus on achieving cash settlements
and should be limited to low volume, low toxicity disposers
who normally would not Tiake a significant contribution to the
costs of cleanup in any event.
Section 122(g) of SARA 1/ is in large part a codifica-
tion of the Agency's position with regard to settlements
with d_e minimis parties. While recognizing the liability of
such parties, thac section gives EPA discretionary authority
to enter into expedited settlements with de minimis waste
contributors and de minimis landowners. Section 122(g)(1)
generally provides that when EPA determines tnat a settlement
is "practicable and in the public interest," the Agency shall,
"as promptly as possible," seek to reach a "final" settlement
with a d_e minim is PRP by consent decree or administrative order,
if the settlement "involves only a minor portion of the response
1/ The full text of Section 122(g) of SARA is provided as
an appendix to this memorandum.
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_ 4 _
coses at cne facility concerned." Section 122(g)(1). A o_e
3 in is 15 contr^outor settlement with a gen era cor or transporter
is authorized if these criteria are net and if the Agency ^e-
re~--es fat DC.h "-re anour.t jf :r e -tazarcous s-cstarc^-
contributed by that party to tne facility," and "the toxic : r
other hazardous effects )f tie substances contributed by f.^.t
party to the facility," are "minimal in comparison to other
hazardous substances at tne facility." Section 1 22 (g) ( 1 ) ( A) .
Section 122(g) further authorizes settlements with d_e minimis
landowners as defined by Section 1 22 (g) ( 1 ; (B) of SARA. Because
the Agency will be providing a separate guidance document on de
minimis landowners under SARA, this document will focus on the
definition and settlement requirements of the d_e minirois waste
contributor.
III. GUIDELINES FOR NEGOTIATING WITH DE MINIMIS PARTIES
[)e minimis contributor settlements under Section 122(g) of
SARA can be an effective means of providing de minimis parties
with an early and equitable resolution of their liability while
minimizing theiT transaction costs. _De minim is settlements
can be particularly useful to the Government in complex cases
involving numerous PRPs . In such cases, d_e minimis settlements
offer the Agency a method of simplifying CERCLA enforcement
actions through early elimination of the sometimes numerous
minimal contributor PRPs from litigation and negotiations. De
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settlements -nay also increase che amount of response
coses recovers.; cr.rcugn /cluntary settlement agr eements . 7ms
13 oeca^se de 11 p i r? i s jsrcies (wno otherwise mignt noc have
parc-Ccpacea Ln aeccLtneri- •> lay be attracted oy ;ne aavancage->
offered by ce m i r i "i i s settlements and encouraged by cne fact
znat c." = ir fi.nds will oe -isea co pay coses oc cleanup, racner
chan transaction costs. Finally, d_e rain ms settlements nay
increase the likelihood of settlement with the major waste con-
tributors by raising sufficient revenues to reduce the overall
liaoilities of such parties.
To use the de nunJmis settlement provision most effectively,
the Agency wrll focus on achieving comprehensive settlements
in which interested d_e minimis PRPs at a particular site are
addressed in one settlement agreement. De minimis parties
should be encouraged to organize and present multi-party settle-
ment offers to che Government. To limit Governmental and PRP
transaction ccscs, ce mir. lais settlements shoula take the form
of standardized agreements, and the Regions should try to avoid
lengthy settlement negotiations with d_e minimis parties.
At sitea with dozens or hundreds of PRPs, the d_e minimis
settlement authority will be particularly useful in helping to
simplify the negotiation process. In situations of this kind,
it is particularly important for the Agency to gather and release
information about PRP waste contributions to the site at an
earl/- stage, so that potentially de minimis parties can identify
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983*
- o -
and organize themselves to present settlement offers to the
Cover*-.:: enr. ."here sufficient L-.fonnaci.on LS availaole cne
Agency nay tentatively identify potentially d_e m minis parties
in the information released to PRPs unaer Section 122(e)M) of
SARA. The Agency nay also consider negotiating separately wit a
PRP Steering Committees representing suostantial numbers of de
nr.nin is parties. In addition, the Agency nay wish to consult
with the major, i.e., non-de minimis, parties during the de
mi mm is negotiations in order to facilitate a later, comprehen-
sive settlement with such major parties. This is because, among
other things, the volume and toxicity criteria established by
the Agency for participation in the de minimis settlement may
have a significant effect on the willingness of the major parties
to settle.
In determining che timing of a de minimis settlement, the
Agency must consider a variety of factors- the amount of infor-
mation availaole abouc the PRPa and their waste contributions to
the site; the amount of information available about the costs of
remediating site contamination; the nature of the reopeners
included in the covenant not to sue, the amount of the premium
to be paid by the settling parties; and the volume and toxicity
criteria used by the Agency to distinguish between the
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Q O 7
/ u _
cae Legitimate interests at che d_g a in IIP is and major parties ac
cne s^-Cc, ana assure cnac tie .e^el of ris< co che Agency 13
accepcaoLe. The Regions are -oc encouraged co devocs extensive
errorc co ^^scbo^^^ proposals z.: .:e -liniTJis seeders en c unless
chere is a reasonable prospect >f successful sectlemenc.
The Agency nay consider earl./ settlement wnere complete
information concerning PRP cop.tr ibucions and che nature of che
remedy is not yet available. In such early settlements, the
reopeners should oe nore e
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*• f* '-i
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derinea on a. site-speci ~ .c. Dasis. To qualify as a de m in im is
generacor or cr nr-s oo r 1 =' me PR? "nus c na/e concrioutea an amount,
of hazardous substances ^nici is "niniraal in comparison Co the
total arc--, t -it t e :.:... ~v T">e ?3.? ruse also ".ave co^.tr. _rer
hazardous substances v->_ci ace noc s i-gnif icancLy more Coxic and
not of sLgnLfLCanclv greater hazardous effect than other hazardous
substances at the facility, as well as meeting the other condi-
tions set forth in tnis guidance.
If, for example, all PRPs at the site disposed of waste of
similar toxicity ana hazardous nature, e.g., organic solvents,
then those PRPs who had contributed a minimal amount (in rela-
tion to the total amount at the facility) could qualify for de
minimis status because their waste was not more toxic or other-
wise hazardous than other hazardous substances at the site.
If, on the other hand, a PRP disposed of a minimal amount of a
waste which is more highly toxic or which exhibits other more
serious hazardous effects than other hazardous substances at the
site, then that PRP, despite the minimal amount of his contribu-
tion, normally would not qualify for treatment as a d_e minimis
party.
Another way of analyzing the facts posed by the second
example is to consider the cost of remediating site contamina-
tion resulting from the hazardous substance contributed by a
particular party. If a PRP disposed of a hazardous substance
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requiring disproportionately high treatment and disposal coses
or r 53 Q;. r i.-.5 a cicfereit ic lore coscly remedial technique nan
chac *hich otherwise would be cecmieaLly adequate for che sice
cr.en tr.at ?R? scic^.a noc 0 = :reacec as a c e ~~. n. ~ - s ccncr_~u~ . c
even it" he disposed of a reLacively ninn;al aTiounc of sucn
subs taice.
Even if a particular waste contrioutor naeets tne volume
and toxicity requirements for d_e n i n i m i s contributor states,
a possible settlement with a J_e mnimis PRP raust be deternined
by the Agency to be "practicable ana in the public interest."
Section 122(g)(1). This requires the consideration of factors
beyond the basic eligibility criteria -- factors relating to
whether the settlement would effectuate the intent of Section
122(g) and other purposes of the Act. For example, in the un-
likely event that every PRP at a site meets the basic ^e ciinimis
eligibility criteria, a de minim is settlement would not serve
one of the primary goals of Section 122(g). elimination of
certain minor parties early in the process to focus the remaining
case on the aajor parties. In such an instance, the emphasis
should be on reaching a settlement as soon as possible with all
parties using traditional settlement approaches. Similarly, in
a situation where several major parties at a site are bankrupt
or otherwise non-viable, it may not be in the public interest
to "cash out" smaller contributors before reaching a settlement
with the remaining parties.
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5834. 7
o -
The Agency currently has several d_e n in IT is pilot projects
underway. ^::er t-.ese and other ^ect.on 122(g) settlements
have been concluaed, we will consider providing furtier gULcance
our experience with cnese early settlements and consents recei/e!
OP this interim guidance.
o •
V. GUIDELINES FOR SETTLEMENT WITH DE MINIMIS WASTE CONTRIBUTORS
A. Timing of Settlement and Necessary Information
The general goal of settlements with d_e minimis parties is
to allow PRPs who Tiade ninimal contributions to a site to resolve
their liability quickly and without the need for extensive nego-
tiations with the Government. Section 122(g)(3).indicates that
the President shall reaci a settlement or grant a covenant not
to sue as soon as possible after the President has available the
information necessary to reach such a settlement or grant such
a covenant.
The first type of information that tne Agency niust have
is adequate information about the identity, waste contributions
and viability of PRPs for the site concerned. Such information
is essential because the Agency must be able to determine, unaer
Section 122(g)(1)(A) of SARA, that each settling party's contri-
bution by volume and toxicity is niniraal in comparison to other
hazardous substances at the facility in order to enter into a
de mini-nis settlement. Such information is also important because
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tne Agency must be aole ~o e/al iace cne financial viaoilit/ of
ar.c scre^3ci > C -Cs case Against tne non-settling parti.es at
tne site to deter-line whether a d_e m in i ~\ is settlement is "practi-
caoxe an^i in tie p^olic interest' anaer Section 122(g;(J; of
SARA.
Therefore, althougn the Regions ~iay engage in preliminary
negotiations with likely candidates tor d_e minimis settlements
prior to completion of full PRP investigatory work, as a general
rule, d_e minimis settlements should not be concluded prior to
completion of a PRP searcn (including title search and financial
assessments) or prior to such time as the Agency is confident
that adequate information about the extent of each settling
party's waste contribution to the site has been discovered. The
Regions should commence PRP investigatory work concurrent with
the expanded site investigation or, at the latest, the National
Priorities List scoring quality assurances process, and should
make aggressive use of information requests pursuant to Section
104(e) of CERCLA, as amended, and Section 3007 of RCRA, as appro-
priate. The Regions should also use subpoenas, as needed and
appropriate, pursuant to Section 122(e) of SARA, and should
consider all information discovered during site and PRP investi-
gations. 21
2/ PRPs who have been unresponsive to information requests
or subpoenas generally should not be considered for de
minimis settlements.
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^arL-' discussions wich potential candidates
TI in irois settlements will oe mosc oenefioial i" sii
numerous PRPs, where suci discussions "nay be used
nini'iial vasce •: >nt. r L Tutors ~o organize and present
settlement otters co c'le Go^ern^enc. In appropriate
c.ne Agencv lav consider concLuGi"^ de TJinms settle'
•* ^ *—* — __| . _
prior co corapLecion of full ?R? invescigacory work.
cases, che Agency raay use -,ore conservative criteria i
distinguishing between o_e minimis and non-d_e mlnimis pc
i.e. , lower volume and toxicity levels, so that parties
may legitimately be treated as non-d_e minim is are not in
within the de rniniiris class. Such settlements -nasc also
drafted carefully to assure that they provide added p^fce>
to the Agency against the risk that new information may be
discovered about a settling party's waste contribution to t
site.
The second type of information that the Agency must hav
is information about Che costs of remediating site contaninai
_De minim i a aettlements in which PRPs are granted an expansive
covenant not to sue. i.e., one without reservations of rights
for cost overruns and future response action, see infra, pp.
16-18, generally should not be pursued until the Agency is able
to estimate, with a reasonable degree of confidence, the total
response costs associated with cleaning up the subject site,
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?d>
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j. n c 1 uc L ng oversignt anj jpeCHCLjo and naintenance coses. 3'
7~.e Agencv us jail.' * . 11 arr.ve ac :~>LS Level of confidence crly
after A reiedi.il ^n /^ -. -gac.. :>n and feasiDilicy scady ("Rl/fS";
arc a Record of De;_5.:- ;"jor N ^ a /e i = en 'or a>-e close :;
oeing) completed ac rne siie. A d_e nin irp is settlement with -.1
expansive covenant not to sue of this
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O ~> -, , i
a "casnout," i.e. it will noc ncluae a coinnitnent to perform
wor<, - z ..z racier VL',". re': ..re a pa%—ert co :>e -^aae to c~ =
hazardous Suosrance Suoerfunc. 5/ In exchange for chis pay-
protect i jn '..naer Seccion 122(gj(5) of SARA and ~iay receive a
covenant noc to sue as descrioed in Section 7(3^(2) below.
2. Releases from Liaoilicv ana Reooeners
De m inimis settlors nay be granted a covenant not to sue
for civil clains concerning r.'i^ -.ite which seeK injuncti^e re-
lief under Section 106 of CERCLA and Section 7003 of RCRA, or
cost recovery under Section 107 of CERCLA, when EPA deterines
that such a covenant is consistent with the public interest,
as provided in Section 122(g)(2) of SARA. 67 The scope of
this covenant not to sue will vary, depending upon the timing
of the settlement, the amount of infonnat ion available to the
Agency, and the amount of any premium payment to be made by the
V In appropriate cases, the Agency will also consider enter-
ing into de minimis settlements under which the settling
de minimia parTTes agree to perform a discrete portion of the
response action needed for the site, e.g., an RI/FS or operable
uni t.
5/ We are exploring the circumstances under which it may be
appropriate for the settling parties to deposit the amount
paid pursuant to a de minimis settlement into a site-specific
trust fund to be admTnistered by a third-party trustee and used
for site cleanup. Further guidance on this issue will be pro-
vided by separate memorandum.
67 Under no circumstances nay a covenant not to sue for crimi-
nal claims be granted.
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ae minn is parties pursuant co tie settlement. Vataral resource
damage c^:.:3 ~ek farther relief from any settling party if
information not known to the Government at the time of settlement
is discovered which indicates that the volume or toxicity cri-
teria for the site's d_e minmis parties are no longer satisfied
with respect to that party. 7/ This reservation need not be
included if sufficient information about the waste contributions
of all site'PRPs is known at the time of settlement, i.e., if
virtually all of the waste is accounted for, or if site records
and results of PRP investigations are sufficiently complete for
the Agency to conclude that the risk of discovering new infor-
mation about waste contributions to the site is negligible.
_7/ In some situations, the Agency may also require each settling
de minim is party to certify in the settlement agreement that
it has d isc Losed all information in its possession concerning its
waste contribution to the site. This certification should be used
in cases in which the d_e minim is settlement is concluded prior co
completion of PRP inveFt igations", particularly where information
requests or subpoenas have not been issued.
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983-1, 7
-lo-
in addition co cne nacaral resource damage reservation
ana trie res<± c: 4. ~ L ; i for Tew information indicating ciat cie
volume and toxicity criteria for tne particalar settlement are
no longer sar-of-di v-vo f^r'ier reser^ac ^ons o if r.-,-i;s :> r
"reopeners" say be required depending upon tne facts of tne
cage and tne tiding of c \e settlement. T-iese raopeners protect
the Agency against 1) the risk of cost overruns during tne
conpl e t ion )f the remedial -i.rujn and 2) the risrc tnat further
i
response action will be necessary in addition to the worx
specified in the ROD.
If an RI/FS and ROD have been (or are close to being) com-
i
pleted at the site, and the Agency has sufficient information
upon which to evaluate the likelihood of cost overruns or future
response action and the potential costs associated with these
contingent events, then the Agency may accept a premium payment
fro'ra the settling de tninirnis parties in lieu of one or both of
these two reopeners, depending on the facts. However, if a d_e
minimis settlement is concluded prior to completion (or substan-
tial completion) of the RI/FS and ROD, at a time when the Agency
has insufficient information upon which to evaluate these risks
and develop a premium payment commensurate with them, then re-
openers for cost overruns and future response action generally
will be required. In appropriate cases, t'le Agency may make
exceptions to this general rule and accept a very high premium
payment, which provides a wide margin of safety to the Government
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Q p 7 , 7
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ac an earlier scage in cne process in Lieu or these cvo reopeners
.-.5 -;;e_ -:30v -e 113 Agency ~_il also c^nsnier /ar-.ous
coins of ore- RI/FS ana ROD a_e -i minis settlements which provide
io
i~.e sorcunti zo
while t:>rote:ting the Government against cne adaicional risk^
oresenced 27 sucn earl/ agreer:encs. For example Z?A may con-
siaer partial secclemencs ia whica :ae J_e -iinimis parcies niake
a payment in satisfaction of their liaoiLity for past costs and
projected RI/FS costs. Settlements of this kind would not
address the settling parties' liability for post-RI/FS costs.
EPA nay also consider settlements of greater scope in which an
ap-front payment is -aade for known past costs and projected
RI/FS and remedial costs. In settlements of this kind, EPA
would reserve the right to reopen the agreement if actual costs
exceed EPA's estimate by an agreed-upon dollar amount or percen-
tage. Alternatively, the Agency may pursue settlements in which
an up-front payment is made for past costs only and in which the
settling d£ minimis parties agree to pay a specified percentage
of all future response costs.
In certain additional situations, the cost overrun or future
remediation risks may be covered through a method other than a
reservation of rignts or a premium payment from the settling de
minimis parties. First, if an extremely high or worst-case
estimate of remedial action costs is used for the settlement,
then a cost overrun premium or reopener may not be required from
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A -
che seeding d_e minms parties. Second _f cne 'oajor ?R?s a r
rr.e =L~= ~i-.ve ~ace a SI-I^LIJ o )- Q L ."ne1" c ~o perron "~.e re~aca,.al
action selected in che iOD regardless of ics cost then tne
r-.o<- of .-use o/err^ns «ill ce oorne ;y -.-jse ^a_,or parties arj
a premium payment or reojenec for cost overrans will not oe
reca.rel by cae Gover~^an.c froc tae sectl.pj _i_e ~i i n_i.->_ i s ?R?s
Finally, if tne major ?R?s have e
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9824
- ; 9 -
che de m in inij3 share. Ic is based upon the cype of information
chat is nose L. e readily availaole ana aoes noc require
rrte PRPs ana che Agency co invesc an inordinate a.Tounc of effort
arguing i-> >u~ c le -ippr 3pr idCe 3nare.
The volumetric snare nay be adjusted, nowever, based upon
che ocher factors regarding parcial s etcl events idencified in
che Interim CERCLA Settlement Policy (Pare IV, 50 Fed. Reg. 5037-
38). Factors tnat may oe of particular importance include ability
to pay, litigative risks, public interest considerations value
of a present -sua certain, inequities and aggravating factors,
and the nature of the case regaining against other parties after
settlement. The shares may also be adjusted on the basis of a
Nonbinding Preliminary Allocation of Responsibility, if one has
been developed for the site pursuant to Section 122(e)(3) of SARA.
In addition to the volumetric share of past and projected
response costs, the Agency generally will require payment of
a premium from each settling d_e minimis party in exchange for
granting a covenant not to sue which does not include reopeners
for cost overruns and future response action. 9/ If the settle-
ment is concluded prior to completion of che RI/FS and ROD, and
information about projected costs is limited, then the cost
_9_/ The premium payment reduces the liability of the non-settling
PRPs in the amount of the premium, unless otherwise provided
in the settlement agreement. In some cases, it may be appropriate
for the premium to be deposited in a site-specific trust fund as
discussed supra n. 5, p. 14.
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overrun and future response action premiums should oe calculated
co reflecc rii- .1^.-easel 'e/el ;f ^nce r c-i. ncy. 1 0 ; .T.S disc us sen
earlier, if che Taj or PRPs are -issuing the responsibility for
co nil. z L ^ - \ -» . rj -i i a p , cnen me prent-n -t »>.-;-; i a / :> e - a - e
availaole co cnose ?R.?s racher tnan ~o che \^ency. In chis s. : a-
acion, the premium amouncs -nay be negoCiacad between che "ajor
PRPs and Che d_e TI in i rai s secclors.
Furcheimore, because de Tunimis PRPs are joincly and seve-
rally liable for response coses ac che siCe, the amount to be
paid by a de minimis settlor Is affected by the amount available
from other PRPs. Thus, if a significant portion of the major
parties ac Che suce are bankrupt or ocherwise noC financially
i
viable, Chen the d_e miniiis offer may need to reflect a greater
proportion of response costs, rather than simply a volumetric
share and a premium. It is also possible chat mixed funding
may be appropriate in such a situation. 1 1 /
4. Enforcement of Payment
If a settling party fails to make any payment required
by a dj minlais settlement, or otherwise fails to comply with
any cenn or condition of che seccleraenc, chac parcy is subjecc
Co enforcement action, including imposition of civil penalties
1 O/ Further guidance on calculating premium payments will be
provided by separate memorandum.
1 1/ Guidance on mixed funding will be issued separately and
is forthcoming.
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9834.7
pursuanc co Section 109 on CERCLA, as amended. See Section
122(1) of 5-.RA. In acc.r.D-^ ~ae .-genc/ ~>~/ include a pro-
vision in tne se-cla""enc doc-^e-i;: -•hi-:'', permits the agreement
to oe vacated ..n cne eveir- jf noncompl lance.
5. Type of \gree^ent
Section 122(g;(j.) of SARA requires ti.tt o_e ainimis settle-
nents be entered as either judicial consent decrees or admini-
strative Triers on consent. The circumstances and procedures
under which these two alternatives should be used are briefly
described helow.
a. Judicial Cons_en_t_Decre_e
Under Section 122(d)(1)(A) of SARA, settlements with non-
de minimis PRPs which provide for remedial action must be
embodied in consent decrees. Thus, if the d_e niininis settlement
is part of a larger, more comprehensive agreement with the non-
d_e_ m^nimis parties under which remedial action will be performed,
it may oe advisable and efficient to use a consent decree for
the entire settlement. Similarly, if the Government has already
filed a CERCLA .Section 106 or 107 action with respect to the
site, a consent decree with the d_e minimis parties may be useful
because the court will be familiar with the case and should be
able to approve the settlement expeditiously.
At the present time, all de minimis consent decrees must
be referred to Headquarters by the Regions and must receive the
concurrence :>£ the Assistant Administrator for ir.fcredent and
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965^
- 22 -
Compliance Mom. cor ing (" AA-OEC!'.") and che Assistant .-s.d-uni.3cra-
cor cor .?o _ LC vasce ar._ Iner^ency Response '"An-OSWER") or -'.s
or ner aesignee prior co referral co che Department of Justice
for :
suojecc --) -i Cinrty-day public jonrnent period after Ijd^in^.
A nod el Seccion I22(g) consenc decree will be issued shortly.
b. Administrative Order on Cons en t
A d_e ninmis seccle-nenc nay also be embodied in an
scraci/e >--ler )n c;aseac ("consenc order"). See Section 122
(d)(1)(A) of SARA. Because of cne potential effect of ad-nini-
stracive
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983^ . 7
- 23 -
or disapprove che settlement, anless tie AG has reacned agree-
ment with -".e .-gency on an extension or c^ne.
Seccion 122(i) of SARA requires noc ice of a 1,1 aarainistra-
t,.ve a e rj_iP in is settlements to oe puoL^snaj in me Federal
Register for a en i re/-.lay puolic corn-nent period. The Agency
-mst consider -til cj'nencs receiv't aid "'nay withdraw or witn-
hola consent to the proposed settlement i If such comments disclose
facts or considerations wnich indicate the proposed settlenent
is inappropr {.ate, improper, or inadequate." 1 37 Section 122(i)(3)
of SARA. Modifying or withdrawing consent to an administrative
settlement is subject to the same OECM and OSWER concurrences
as are initial agreements.
More detailed guidance on the procedural aspects of de
minimis consent orders, including Regional referral of orders
for Headquarters concurrence and AG approval, solicitation of
public comment, enforcement of orders, and other related matters,
will be provided by separate memorandum. A model Section 122(g)
consent order will be issued shortly.
VI. PURPOSE AND USE OF THIS MEMORANDUM
This memorandum and any internal procedures adopted for
its implementation are intended solely as guidance for employees
13/ The payment provisions in de minimis consent orders should
not require payment to be made until after the public
comment period has closed -ind until a.fter the Agency has had
sufficient time to determine whether any comments received re-
quire modification of or withdrawal from the consent order.
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9834, 7
- 2+ -
of che U.S. Environmental Protection Agency. They do not con-
scit-te rul enasc 1 ~g cy ere .-^geioy anc tiay noc oe relied upon co
create a righc or a oenefic substantive or proceauraL, enforce-
aoie ac law or ia equity oy any person. Tne Agency aay ta^e
action at variance with this senior and an or its internal i~ipie-
rnentirg procedures. -
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983*1
APPEND LA
TEXT OF a£CTION 122(g) OF SARA
(1; EXPEDITED FINAL ^cfTLAMENT. -- Whenever
praccicaole ana in che puolic nearest:, as determined
by c!->e President, cne President sidlL as Troapcly as
peso-Die reacn a final settlement wic'n a potentially
responsible party 11 an ad Tin isc ra~ ive oc civil accioi
unaer section 106 or 107 if sucn settlement involves
only a 'inor portion >f tie response ~o>, ;s at tne
facility concerned and, in t ie j .dgment of the President,
the c j'ld 1.1-ons in e'.tier of r.-ie following subparasrap\
(A) or (B) are ^ec
(A) Both of the following are Tiinimal in
comparison to other nazardous .substances at tne
facility
(i) The amount of the hazardous substances
contributed by that party to the facility.
(LL) The toxic or other hazardous effects
of the substances contributed by that party to
the facility.
(3) The potentially responsible party --
(i) is the owner of the real property
on or in which the facility is located;
(ii) did not conduct or permit the
generation, transportation, storage, treatTent,
or disposal of any hazardous substance at the
facility; and
(iii) did not contribute to the release
or threat of release of a hazardous substance
at the facility tnrough any action or omission.
This subparagraph (B) does not apply if the poten-
tially responsible party purchased the real property
with actual or constructive knowledge that the
property was used for the generation, transportation,
storage, treatment, or disposal of any hazardous
subs tance.
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98^/''
(2) COVENANT NOT TO aU£. -- The President may
orovi.de 2 covenant -iot to sue with respect to the
cac-L.cy ::>ncerieu to any party «no has entered into a
settlement under this suosection unless sucn a covenant
would be inconsistent -VLII tie puolic interest as deter-
mined under suosectijn ', f) .
(3) tXPEDITF. j -';<-V?-;\T. -- ri-= °resident snail
reach any such settlement or grant ar.y such covenant
not to sue as soon as possible after the President has
available the nfornation necessary to reach such a
settlement or grant sucn a co/enant.
(4) CONSENT DECREE OR ADMINISTRATIVE ORDER. --
A settlement mder thi-> ~> ajsec1100 shall be enterei -is
a consent decree or embodied in an .adminis trat ive or F r.Urt s^<:tlene it. In tie case
of any facility where the total re^oose costs exceed
3500,000 (excluding interest), tf cae settlement is
embodied as an administrative order, the order aay oe
issued only with tie prior written approval of the
Attorney General. If the Attorney General or his desig-
nee has not approved or disapproved the order within 30
days of this referral, the order shall be deemed to be
approved unless the Attorney General and the Ad-ninstrator
have agreed to extend the time. The district court for
the district in which the release or threatened release
occurs may enforce any such administative order.
(5) EFFECT OF AGREEMENT. -- A party who has re-
solved its liability to the United States under this
subsection shall not be liable for claims for contribu-
tion regarding matters addressed in the settlement.
Such settlement does not discharge any of the other
potentially responsible parties unless its terms so
provide, but it reduces the potential liabiliry of tie
others by the amount of the settlement.
(6) SETTLEMENTS *I1H OTHfiX POTENTIALLY RESPONSIBLE
PARTIES. -- Nothing in this subsection shall be construed
to affect the authority of the President to reach settle-
ments with other potentially responsible parties under
this Act.
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Qp
-i.Y.iHOVE'TnL r^HEC CION -.G-.ML'L
i i
S.PERFIND PROGRAM DE MINIMIS CONTRIBUTOR SETTLEMENTS
AGENCY Environmental Protection Agency
ACTION Request r\> r ^aolic comment
SLMilARY Tne Agency is puolishing today its Interim
Gaidance on Settlements with De M i a i TI i s Waste ContriDutors
under Section 122(g) of SARA in order to inform the public
ana to solicit public comment on cms mportant aspect of
the Superfund enfor.^n»eit process. This document provides
guidelines for determining which potentially responsible
parties ("PRPs") under Section 107(a) of the Comprehensive
Environmental Response, Compensation, and Liability Act jf
1980 ("CERCLA" or "Superfund"), as amended by the Superfund
Amendments and Reauthor i zation Act of 1986 ("SARA"), 'nay
qualify for treatment ab d_e minim is waste contributors
pursuant to Section 122(g)(1)(A) of SARA. It also provides
guidelines for negotiating with d_e minimis waste contributors
and for entering inco settlements with such parties pursuant
to Section 122(g) of SARA.
This publication does not address qualifications for
or settlements with c[e minimis landowners under Section
122(g)(1)(B) of SARA, which will be covered by separate
guidance.
DATE Comments must be provided on or before [60 days
from date of publication].
1
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965-. ~
ADDRESb Comments sao.il. i 3e address-el c; Janice Lnett
U.S. Environmental Protection Agency, Office of Enforce-
•nenc a->d Compliance Monitoring Waste Enforcement Division
LE-1346 -+01 M Street, S.W. Washington, D.C. 20460,
(202) 332-3077'.
.-"OR r'URTHEK I NFOR l-\i ION CONTACT Janice Linett, ij. S Eivi-
ronraental Protection Agency, Office of Enforcement and
Co->tjl L j.-|c: [;*PO-I>LAT[J'M sec-tvi i?2(g) of SARA provides-
E?\ vich discretionary authority to eater into expedited,
f j nal settlements vit i -J_e 211 n i r i s waste contributors to
Superfund sites. De iiinnls wa^te contributors are tnose
generator and transporter DRPs who, in the judgment of the
Agency (as delegatee of the President), contributed hazardous
substances in an amount and of such toxic or other hazardous
effects as to be minimal in comparison to other hazardous
substances at the facility. Section 122(g)(1)(A). Pursuant
to the requirements of Section I22(g)(1), d_e minimis con-
tributor settlements must be practicable and in the public
interest,"as determined by the Agency, and must involve
only a minor portion of the response costs at the facility
concerned with respect to each settling party.
De minimis contributor settlements under Section
122(g) of SARA offer potential advantages to PRPs and the
Agency alike. For de minimis parties, such settlements
can be an effective means of achieving an early and equi-
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caole resolution or tne_i Liaoility viti tie expert L c ire
of reduced legal fees and other transaction costs. For
the Agency Section 122(g) settlements provide a means of
smpi-f/-~g tne CERCLA enforcenent process tn.rough earl/
el i-n i- at .on from litigation and negotiations of the jften
numerous iinitnai contributor ?RPs. De ~ii.nj.T-s settlements
also "ifte- t i-i potential for ner^-i^l numoers of /olaitary
sectlc~e">c agreements. This LS oecaase de n in _i"i ib cor.tri-
but.OL"-. ~ay be ittr-i^ite! 'oy cne advantages jffereJ by Section
122(g) settlements, and non-de m minis parties may be
encouraged to ^ettle ^is a result of the revenues raised
through such agreements.
To use the de minimis settlement provision roost
effectively, the Agency will focus on achieving settlements
in which multiple d_e minimis PRPs ac a particular site are
"cashed out" under one comprehensive agreement. De^ minimis
parties should be encouraged to organize and present multi-
party settlement offers to the government. Further, to
limit governmental and PRP transaction costs, de minimis
settlements should be standardized in form and should not
be th* subject of lengthy negotiations.
In the typical d_e minimis settlement, the settling
parties, in exchange for a payment, vill receive statutory
contribution protection under Section 122(g)(5) of SARA
and may be granted a covenant not to bue where such a
covenant is consistent with the public interest under
Section 122(g)(2). The scope of the covenant not to sue
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9654,7
will /ary ueperui .. ig -V^1 ~"l<2 ciiing jf ij
cne amount of iifornation aval I Hole Co the Agency ar>
s^te ?R?s a-i - response c)scs, t'te amount jf any pre^in
jaynencs recovered chrougn the sec cl e'nenc ana ocaer
relevant copsider-itijas.
The Agency is i-vare chat d_e 11 n u i s contributor -
seccleiiencs are the subject of great interest to poten-
tially responsible1 oarzi.es and tne puoLic. Therefore, E?A.
is publishing this interim guidance to provide wide public
distribution of information on this aspect of SARA imple-
mentation and to gain the benefit of public comment. EPA
will reevaluate this interim guidance based upon its
experience with its implementation and upon any public
comments that iay be received.
The interim guidance follows.
- _
Thomas L. Ad am s~," ~J r ." Da t e
Assistant Administrator
for Enforcement and Com-
pliance Monitoring
J.Winaton Porter Date
Assistant Administrator
'• for Solid Waste and
Emergency Response
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