United Slates
            Environmental Protection
            Agency
              Office of
              Solid Waste and
              Emergency Response
 &EPA
DIRECTIVE NUMBER:    9634-8
TITLE:  Convenants Not To Sue Under SARA

APPROVAL DATE:  ju]^lo,i987
EFFECTIVE DATE:  ju^ 10,1987
ORIGINATING OFFICE: OECM,DOJ,OWPE
Q FINAL
DDRAFT
  LEVEL OF DRAFT
    C? A — Signed by AA or OAA
    OB — Signed by Office Director
    DC — Review & Comment
REFERENCE (other documents):
SWER       OSWER       OSWER
  DIRECTIVE    DIRECTIVE    Dl

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            United Slates
            Environmental Protection
            Agency
              Office of
              Solid Waste and
              Emergency Response
 &EPA
DIRECTIVE NUMBER:    9634-8
TITLE:  Convenants Not To Sue Under SARA

APPROVAL DATE:  ju]^lo,i987
EFFECTIVE DATE:  ju^ 10,1987
ORIGINATING OFFICE: OECM,DOJ,OWPE
Q FINAL
DDRAFT
  LEVEL OF DRAFT
    C? A — Signed by AA or OAA
    OB — Signed by Office Director
    DC — Review & Comment
REFERENCE (other documents):
SWER       OSWER       OSWER
  DIRECTIVE    DIRECTIVE    Dl

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_ _^ _ United States Environmental Protection Agency i Directive Number
jQLCDA Washington, DC 20460
vxcnr^ OSWER Directive Initiation Request
2. Oriqlnator Information
Name of Contact Person Mail Code Office
John F. Cross Wh-527 0
3. Title
Convenants Not To Sue Under SARA

WPE 47°5-6e7 70 *

4. Summary of Directive (include brief statement of purpose)
This memorandum updates the Interim Settlement Policy by providing guidance
on the implementation of the mandatory and discretionary provisions of SARA relation
to use of convenants not to sue in consent decrees. Attached to this guidance is a
model convenant not to sue.
5. Keywords
Convenants Not To Sue Under SARA.
6a. Does This Directive Supersede Previous Directive(s)?
X No

b. Does it Supplement Previous Oirective(s)'.> v
A No

7. Draft Level
X A - Signed by AA/DAA 8 - Signed by Office Director

Yes What directive (number, title)

Yes What directive (number, title)


C - For Review & Comment D - In Development

8. Document to be distributed to States by Headquarters?
X

Yes


No
This Request Meets OSWER Directives System Format Standards.
9. Signature of Lead Office Directives Coordinator
l**4**^*S ^ 2fahr+-<>
1 0. Name and Title of Approving Official
Date
•7-2>i- 81
Date
   EPA Form 1315-17 (Rev. 5-87) Previous editions are obsolete.
  OSWER      OSWER         OSWER        O
VE  DIRECTIVE     DIRECTIVE    DIRECTIVE

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                                                       9834,8
              UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                          WASHINGTON. D.C. 20460
                                    I 0 1987
MEMORANDUM
SUBJECT:
FROM:
          Covenants Noc To Sue Under SARA
          Thomas L. Adams, Jr.
                                      JS V n i. i
          Assistant Administrator for Enforcement
            and
          J. Winston Porter
          Assistant Administrator for Solid Waste
            and Emergency Response
TO
          F. Henry Habicht II
          Assistant Attorney General
          U.S. Department of Justice
Regional Administrators, Regions I - X
I.   Introduction
     In the Interim CERCLA Settlement Policy, 50 Fed. Reg. 5034
(1986), EPA provided guidance on when releases from liability were
appropriate as consideration for an agreement involving a private
party cleanup or reimbursement of EPA's costs.. That policy
expressed a strong preference for issuing releases in the form of
covenants not to sue.  The Superfund Amendments and Reauthorization
Act (SARA) confirms the authority of EPA to release responsible
parties from certain liabilities in settlement of an EPA claim
under CERCLA.  In Section 122(f) of SARA, Congress adopted EPA's

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                                                         9834-8
                               - 2 -
 policy of drafting releases in the form of covenants  not  to  sue
 and also established specific requirements governing  the  Agency's
 ability to issue such covenants.   SARA includes  several express
 requirements regarding covenants  not to sue and  also  gives the
 Agency discretion to place further conditions  on the  extent  of
 such covenants.   This memorandum  updates the Interim  Settlement
 Policy by providing guidance  on the implementation  of the mandatory
 and discretionary provisions  of SARA relating  to use  of covenants
 not to sue in consent decrees.  Attached to this guidance is a
 model covenant not to sue.
 II.   Summary of  Statutory  Provisions
      Section 122(f)(1)  authorizes  EPA to covenant not to  sue
 responsible  parties  for "any  liability to the  United  States under
 this  Act,  including  future  liability,  resulting  from  a release or
 threatened release addressed  by a  remedial action . .  . ."  Such
 covenants  may be  provided  if  each  of the following  conditions are
 met:
     A) The  covenant  not to sue is  in the public interest;
      B) The  covenant  not to sue would expedite the  response;
     C) The  settlor  Is  in full  compliance with a consent  decree
        under S  106 addressing  the  release or  threatened  release;
     D) EPA  has approved the  response action.
 § 122(f)(1).
     Prior to  entering  a covenant  not  to sue under  Section
 122(f)(1), EPA must assess the  appropriateness of the covenant
under seven  factors set forth in Section 122(f)(4).   These factors,

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                                                        9834,8
                               -  3 -

 which relate Co the effectiveness,  reliability, and enforceability
 of the remedy,  and the nature of the  risk  remaining at the site,
 include:
      A)  The effectiveness  and reliability  of  the remedy, in
         light of the other alternative  remedies considered for
         the facility concerned.
      B)  The nature of the  risks  remaining  at  the facility.
      C)  The extent to which performance standards are included
         in  the  order or decree.
      D)  The extent to which the  response action provides a
         complete remedy for the  facility,  including a reduction
         in  the  hazardous nature  of  the  substances at the facility.
      E)  The extent to which the  technology used in the response
         action  is  demonstrated to be  effective.
      F)  Whether the Fund or other sources  of  funding would be
         available  for any  additional  remedial actions that might
         eventually be necessary  at the  facility.
      G) Whether the remedial action will be carried out, in whole
        or  in significant  part,  by the  responsible parties them-
         selves.
§  122(f)(4).
      In addition to authorizing  EPA,  in its discretion, to covenant
not to sue  for  liability,  including future liability, Section 122(f)
mandates that EPA  grant a  covenant not  to  sue for future liability
in two specific circumstances.   Section 122(f)(2) provides that
where the four  conditions  in Section  122(f)(1) have been met, EPA
must  issue  a  covenant not  to sue for  "future  liability for future

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                                                         9834,8
                               - 4 -

 releases" if:   (1)  EPA selects  a remedial  accion  involving offsite
 disposal of a  hazardous substance after  rejecting an onsite response
 which fully complies  with  the National Contingency Plan  (NCP); or
 (2)  the selected  remedial  action requires  the destruction, elimi-
 nation, or permanent  immobilization of hazardous substances.  Such
 a covenant may only address  the portion  of  the remedial  action
 which involves these  two situations.
      Assuming  that  a  covenant not to sue for future liability is
 otherwise authorized  under Section 122(f),  Section 122(f)(3)
 prescribes  that a covenant not  to sue for future liability shall
 not  take  effect until EPA  has certified  that the remedial action
 has  been  completed  in accordance with the terms of CERCLA.
 Moreover, whether the covenant  is  for future or present  liability,
 Section 122(f)(5) conditions such  covenants upon satisfactory
 performance of the  terms of  the  settlement  agreement.
      Finally,  Section 122(f)(6)  addresses exceptions to covenants
 not  to  sue for future liability  provided under Section 122(f)(1).
 For  example, EPA must except from  any covenant not to sue for
 future  liability any  future  liability related to the release or
 threatened release which is  the  subject of  the covenant where such
 liability arises from conditions unknown at the time the remedial
action  is certified complete.  §  122(f)(6)(A).  This "reopener" for
unknown conditions is not  required  for special covenants granted
under Section 122(f)(2) or for de  rainimis settlements under Section
 122(g).  In addition,   Section 122(f)(6)(B)  provides that a waiver
for the unknown conditions  reopener  in Section 122(f)(6)(A) may be

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                                                        9834,8
                              - 5 -
granted  in  "extraordinary circumstances."  In determining whether
extraordinary circumstances exist, EPA must consider "such factors
as  those  referred to  in  [Section  122(f)](4)J and volume, toxicity,
mobility, strength of evidence, ability to pay,  litigative risks,
public interest considerations, precedential value, and inequities
and aggravating factors."  § 122(f)(6)(B).  Nonetheless, even if
extraordinary circumstances exist, the unknown conditions exception
may not be waived if other terras  of the agreement do not provide
reasonable assurance that public  health and the environment will be
protected from any future releases.  Section 122(f)(6)(C) authorizes
EPA to except from covenants not  to sue future enforcement actions
necessary to protect public health, welfare, and the environment.
III.  Explanation of Key Statutory Provisions
     In interpreting Section 122(f) and developing a policy for its
implementation, EPA has  looked to the expressions of Congressional
intent contained in other parts of SARA and the relevant
legislative history.  These sources indicate that Section 122(f)
serves several goals, including:
     1)   encouraging private party cleanups by providing EPA with
          the authority  to grant  covenants noc to sue;
     2)   encouraging more permanent cleanups by codifying the
          principle that the more permanent the cleanup the more
          complete the release;
     3)   protecting the public by ensuring that responsible
          parties remain liable for future releases requiring
          future remedial action.

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                                                         9834-8
                               - 6 -
      A.   Present Liabi.li.cy and Future Liability
      In Section 122(f)(1),  Congress authorizes  EPA to  issue
 covenants not to sue for both present  liability and  future
 liability.   In the context  of settlements  involving  remedial action,
 EPA interprets present  liability as a  responsible  party's obligation
 to pay those response costs  already incurred  by the  United States
 related to  a site and to complete those  remedial activities set
 forth  in the Record  of  Decision (ROD)  for  that  site, including
 meeting any performance  standards or other measures  established
 through the remedial  design  (RD)  process.   Future  liability refers
 to a responsible  party's  obligation to perform  any additional
 response activities  at  the site which  are  necessary  to protect
 public  health  and  the environment.
     In deciding whether  to  provide a  covenant  not to sue for
 present  liability, EPA must  consider the criteria  in Sections
 122(f)(1) and  122(f)(4).  These factors  essentially  codify the
 approach  taken  in  EPA's  Interim CERCLA Settlement  Policy.  There,
 EPA stated  as a general principle that "the more effective and
 reliable  the remedy, the more  likely it  is  that  the Agency can
 negotiate a more expansive release."   In judging the reliability
 and effectiveness  of the  remedy,  the Interim  Settlement Policy
 placed  special emphasis on whether  the remedy requires that
health-based performance standards  be  met.  As noted above,
Section  122(f)(4)  explicitly makes  performance standards a factor
 to be considered and EPA continues  to  regard  this  factor as
critical.  Where the criteria  in  Section 122(f)(1) are fulfilled

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                                                       9834,8
                               -  7  -

 and  where consideration  of  the factors  in Section 122(f)(4) suggests
 the  remedy is  reliable,  effective, and  enforceable (such as, for
 example,  where the  remedy includes numerical performance standards),
 a  covenant not to sue  for present  liability may be provided which
 takes  effect upon approval  of  the  consent decree by the court.  On
 the  other hand, where  the criteria in paragraph (f)(1) are met but
 the  factors in Section 122(f)(4) indicate that some questions
 remain about the reliability,  effectiveness, and enforceability of
 the  remedy, any covenant not to  sue for present liability, if
 appropriate at ?.ll, would have to  be conditioned on a demonstration
 of the effectiveness and reliability of that remedy.
     Covenants not  to  sue for  future liability are also made
 contingent on  the criteria  set forth in Section 122(f)(1) and the
 factors enumerated  in  Section  122(f)(4).  When these conditions
 are  met,  EPA may, in its discretion, provide a covenant not to sue
 for  future liability but such  a  covenant, according to Section
 122(f)(3), may not  take effect until EPA certifies that the remedial
 action has been completed.  Prior  to certification, therefore, the
 settling  party remains fully responsible for any future liability
 for  future remedial action  necessary at the site.  Following certi-
 fication,  unless a  special  covenant under Section 122(f)(2) is
 required  or extraordinary circumstances are present, the covenant
not  to sue for future  liability  is subject to a reopener covering
 (1)  unknown conditions as mandated by Section 122(f)(6)(A), (2)
any  other  conditions EPA deems advisable based on the Section
 122(f)(4)  factors,  and (3)  future  enforcement activity necessary

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                                                        9834-8
                               - 8 -

 and appropriate to assure protection  of  public  health,  welfare,
 and the environment as  provided in Section  122(f)(6)(C).
      B.   Certification  of Completion  of  the  Remedial Action
      Section 122(f)(3)  specifies  that a  covenant  not to sue for
 future liability shall  not  take effect until EPA  certifies the
 remedial  action is  complete.   In  the  context of paragraph 122(f)(3).
 EPA interprets  completion of  the  remedial action  as  that date at
 which remedial  construction has been  completed.   Where a remedy
 requires  operational activities,  remedial construction would be
 judged complete when it can be  demonstrated  that  the operation of
 the  remedy  is successfully attaining  the requirements set forth in
 the  ROD and  RD.
      The  exact  point when EPA can  certify completion of a
 particular  remedial action depends  on  the specific requirements of
 that  remedial action.  Each consent decree should include a detailed
 list  of the  those activities which  must be completed before certi-
 fication  can occur.
     Certification of completion under Section  122(f)(3) does not
 in any way affect a settling parties'  remaining obligations under
 the consent decree.  All remedial activities, including maintenance
and monitoring, must be continued as  required by  the terms of the
consent decree.
     C.   Reopeners
     Under the CERCLA Interim Settlement Policy, EPA required that
there be  included in every consent  decree reopeners covering
situations where EPA received additional information after the

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                                                         9834,8
                               -  9  -

 time of che agreement  regarding  site conditions or scientific
 determinations  which  indicates that the site may pose an imminent
 and  substantial endangerment  to  the public health or welfare or
 to the  environment.  Under Section 122(f), a slightly different
 approach  to reopeners  must be  followed.  Section 122(f) provides
 that for  future liability, no  covenant not to sue shall be effective
 prior to  certification of completion of the remedial action.
 Technically,  therefore, since  there is no release of future liability
 prior to  certification, there  is no need for reopeners in that time
 period.   Reopeners for future  liability only become necessary after
 certification,  when the covenant not to sue takes effect.
      As to  reopeners regarding future liability, Congress expressly
 required  a  reopener for unknown  conditions.  In contrast to the
 Interim Settlement Policy, however, Congress expressly eliminated
 any  endangerment threshold for that reopener.  Congress also autho-
 rized EPA,  in Section  T22(f)(6)(C), to include any other reopeners
 "necessary  and  appropriate to assure protection of public health,
welfare,  and the environment."   EPA believes that it is in the
public interest and consistent with Congressional intent to require
a second  reopener covering situations where additional information
reveals that the remedy is no  longer protective of public health or
the  environment.  It is not in the public interest to release
responsible parties from liability for additional response actions
made necessary by new  information, given, as noted in the Interim
Settlement  Policy, "the current  state of scientific uncertainty
concerning  the  impacts of hazardous substances, our ability to

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                                                         9834,8
                               - io -
 dececc them,  and the effectiveness  of remedies  at  hazardous waste
 sites."  50 Fed. Reg.  at  5039.
      Congressional concern  with  situations where the  remedy fails
 to protect public health  or the  environment  can be seen  in SARA's
 mixed funding and five-year review  provisions.  The mixed funding
 provision in  Section 122(b)  states  that  if mixed funding is adopted
 at a particular  site,  "the  Fund  shall be  subject to an obligation
 for subsequent remedial actions  at  the same  facility  but only to
 the extent that  such subsequent  actions are  necessary by reason of
 the failure of the original  remedial  action.  Such obligation shall
 be in a proportion equal  to, but not  exceeding, the proportion
 contributed by the Fund for  the  original  remedial  action."  This
 provision anticipates  that  the responsible parties who have settled
 retain  liability for additional  work  necessary  to  address remedy
 failure.   Further support for this  proposition  can be found in the
 Conference Report statement  that the  continuing proportional Fund
 obligation in  mixed  funding  cases is  a settlement  incentive.  H.R.
 Rep.  No.  99-962,  99th Cong., 2d  Sess.  252 (1986).  The Fund's
 continuing obligation would  only be an incentive to settlement if
 in non-mixed funding cases settling parties  retained  liability
where the  remedy  fails to protect public health or the environment.
     The  five-year review provision in Section  12-t(c) also addresses
Congress1   concern  for situations where the remedy  fails  to protect
public health and  the environment by  mandating  periodic  reviews
to assure  that remedial actions do just that.   If  a remedy is found
not to protect public health or  the environment, the  statute provides

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                                                          9834,8
 chat  EPA  may  Cake  or  require such additional remedial accion as is
 necessary.
      Congressional concern chac remedial action might fail to
 protect public health and the environment was not limited narrowly
 to a  focus on the  reliability of the remedial technology at the
 site.  Rather, this concern apparently extended to any situation
 in the future at the site which is judged to present a threat to
 public health and  the environment.  EPA will follow this interpre-
 tation of remedy failure.  For example, should health effects
 studies reveal that the health-based performance levels relied
 upon  in the ROD are not protective of public health or the environ-
 ment, and that public health or the environment will be threatened
 without further response action, then the EPA could invoke the
 remedy failure reopener.  The reopener for remedy failure, however,
 is not meant  to require changes purely based on advances in tech-
 nology.  Under the reopener, EPA would not compel settling parties
 to implement  newly-developed, more permanent remedial technology
unless EPA can show that the present remedy does not protect public
health or the environment.  Neither is the remedy failure reopener
 intended to give EPA the option to make changes in a remedial
action absent additional information received following the entry
of the consent decree.  EPA does not consider the" phrase "informa-
 tion received, in whole or in part, after entry of the consent
decree," as used in the attached model covenant, to include a new
analysis of the same information comprising the record of the
initial remedy selection decision.

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                               - 12  -
                                                       9834.S
      In short,  this reopener is  similar  co  che  reopener for new
 scientific information provided  for  in the  Interim Settlement
 Policy, although the imminent  and  substantial endangerment thresh-
 old has not been included.   To require a showing of imminent and
 substantial endangerment  would be  inconsistent with the provision
 in Section 122(f)  of SARA with regard to unknown conditions as well
 as the  provisions  concerning future  response work in Section 122(f)
 (6)(C)  and Section 121(c).   Moreover, it is the Agency's view that
 requiring  different showings for the two reopeners would lead to
 protracted disputes about which  reopener applied to situations
 necessitating additional  response  activity.
      EPA believes  that  in order  to give  settl )rs some measure of
 certainty  prior  to  certification,  the most  r<_- isonable means to
 implement  the authority in Section 122(f) is  :o specify in consent
 decrees those pre-certification situations  in which EPA would seek
 further remedial action.  Those situations  at a minimum would
 include the circumstances described  in the  future liability
 reopeners:
      1)    discovery of previously unknown conditions; and
      2)    situations where additional information reveals  that
           the remedy is no longer protective of public health and
           the environment.
Thus, prior to certification of completion  of the remedial action,
EPA will reserve its right to  institute  new proceedings to compel,
or recover costs for, further  response action made necessary by
information received, in  whole or  in part,  after entering  of  the

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                                                         9834.8
                               -  13  -

 consent  decree  related  to  either unknown conditions or remedy
 failure.   Following certification of completion of the remedial
 action,  EPA will  reserve its right  to institute proceedings
 only  to  address information received after certification of
 completion of the remedial action related to unknown conditions or
 remedy failure.  Pre-certification  reopeners for unknown conditions
 and remedy failure apply to all covenants not to sue, even to
 special  covenants under Section 122(f)(2).
      Particularly in the pre-certification period, the relationship
 of the remedy to the covenant  and the reopeners should be carefully
 considered.  EPA may insist on broader reopeners where the consent
 decree does not provide for a  remedy that meets the preference in
 Section  121(b)(l) for a permanent and significant reduction of the
 volume,  toxicity, or mobility  of the hazardous substances.  In
 those instances, EPA shall assess the need for broader reopeners
 in the covenant not to sue based on the factors identified in Sec-
 tion  122(f)(4).  Nevertheless, once EPA has determined what reopeners
 are appropriate for the pre-certification period, EPA will agree
 in the covenant to institute new proceedings only where those
 reopener provisions are met.
     Although covenants not to sue must include, at a minimum, the
above-described reopeners during the pre-certification period,
 reopeners are not mandated in  all circumstances in covenants not
 to sue applicable to the period following completion of the remedial
action.  Two statutory provisions address this period.  First,
Section 122(f)(2) mandates that EPA issue a special covenant not

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                                                        9834.8
                               -  14 -

 co sue for future liability in two narrow circumstances:   (1) off-
 site disposal following rejection  of  an  onsite  remedy complying
 with the NCP; and (2)  complete destruction of the hazardous sub-
 stances.   Such a special covenant  may not contain reopeners for
 the post-completion  period.   Second,  Section 122(f)(6)(B)  specifies
 that in extraordinary  circumstances EPA  may exclude a post-comple-
 tion reopener for unknown conditions.  This extraordinary  circum-
 stance  waiver is  only  available where other terms in the agreement
 provide all  reasonable assurances  that public health and the
 environment  will  be  protected.  As  a  policy matter, EPA would also
 not  include  the  reopener for  later-received information relating
 to  remedy  failure  in a situation where the coaditions in Section
 122(f)(6)(B)  are  met.   EPA, however,  is  barred  from granting
 covenants  not to  sue without  reopeners absent a finding that -a
 special covenant  is  appropriate or  that  extraordinary circumstances
 exist.
     D.    Extraordinary  Circumstances
     Section  122(f)(6)(B) provides  that  EPA may .forego including
 a reopener for unknown conditions when extraordinary circumstances
 exist and  "other terms,  condition, or  requirements of the  agreement
 ... are sufficient to  provide all  reasonable assurances that public
health and the environment will be protected from" any future
releases at or from  the  facility."
     The legislative history on this provision  indicates that it
should be narrowly applied.  The House-Senate Conference Report

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                               - 15 -
                                                         9834-8
states  that  "[t]his provision should be implemented in a manner
consistent with  the current application of the Administration
settlement policy as to unknown conditions."  Conference Report,
H.R. Rep. No. 99-962, 99th Cong., 2d Sess. 255 (1986).  By this
statement, the Conference Committee endorsed EPA's extremely
limited use  of the extraordinary circumstances waiver for reopeners
contained in the CERCLA Interim Settlement Policy.
     In Section  122(f)(6)(B), Congress lists as relevant factors
regarding extraordinary circumstances:  "those [factors] referred
to in [Section 122(f)](4) and volume, toxicity, mobility, strength
of evidence, ability to pay, litigative risks, public interest
considerations, precedential value, and inequities and aggravating
factors."  EPA has already explained how many of these factors will
be interpreted in the Interim Settlement Policy.
     A finding of extraordinary circumstances alone is not
sufficient to meet the requirements of Section 122(f)(6)(B).  That
provision also mandates that the unknown conditions reopener may
only be waived if other terms of the agreement provide all reason-
able assurances that public health and the environment will be
protected.   One factor which may be considered in determining
whether all  reasonable assurances have been provided  is whether a
settling party has offered a premium payment to.-insure against the
risk that future remedial action will be required at  the site.
     One of  the instances where EPA has used the extraordinary
circumstances exception in the past is where a responsible party
has filed for bankruptcy.  Whether or not a responsible party's

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                                                       9834^8
                               -  16  -
 bankruptcy filing presents  extraordinary  circumstances will depend
 on a number of case-specific  factors  involving, among other things,
 the grounds upon which  the  party  is  liable, and the  type of
 bankruptcy relief -  liquidation or reorganization -  that is being
 sought  by the  debtor.   EPA  will not  grant a debtor a covenant not
 to sue  which is  broader than  a discharge under the bankruptcy laws
 but neither will EPA make settlement  impossible by insisting on a
 covenant  narrower than  the  discharge  the debtor is entitled to by
 operation of the bankruptcy laws.
     Waivers of  reopeners under Section 122(f)(6)(B) will require
 prior approval by the Assistant Administrators for OECM and OSWER
 and  the Assistant Attorney  General as provided in the Interim
 Settlement  Policy.   50  Fed. Reg. at 5040.
     E.   Special Covenants
     Special covenants  not  to sue under Section 122(f)(2) are
 authorized  for two extremely  limited  circumstances.  First, under
 Section 122(f)(2)(A) a  special covenant is appropriate where EPA
 selects a remedial action involving offsite disposal after rejecting
 a proposed onsite remedy which is consistent with the NCP.  This
 special covenant,  it should be emphasized, is only available where
 EPA has determined that an  onsite remedy fully complies with the
 requirements of  the NCP, but that onsite remedy is rejected in
 favor of offsite  disposal.   It is not sufficient for EPA to have
merely considered onsite proposals in choosing the remedy.  Further,

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                                                        9834,8
 che  Conference  Report  makes clear chac this provision was adopted
 in the  context  of Section  121 requirements regarding offsite disposal
 and  therefore EPA will only grant this special covenant in decrees
 involving  remedies selected under Section 121.  Conference Report,
 H.R. Rep.  99-962, 99th Cong.. 2d Sess. 254 (1986).
     Second, under Section 122(f)(2)(B), EPA will issue a
 special covenant where the remedy involves each of the following
 elements:
     (1)   treatment of hazardous substances so as to
     (2)   destroy, eliminate, or permanently immobilize the
           hazardous constituents of such substances, and
     (3)   EPA determines that
           (a)   the substances no longer present any current or
                currently forseeable future significant risk to
                public health, welfare, or the environment,
           (b)   no byproduct of the treatment or destruction process
                presents any significant hazard to public health,
                welfare, or the environment, and
           (c)   all byproducts are themselves treated, destroyed,
                or contained in a manner which assures that such
                byproducts do not present any current or currently
                foreseeable future significant risk to public
                health, welfare, or the environment.
The term "permanent immobilization" applies only to a site where
treatment  technologies change the fundamental nature and character
of the hazardous substances so that no person faces a significant

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                                                          9834.8
                               - 18  -

 risk of being exposed  Co  the  hazardous  substance.  Conference
 Report,  H.R.  Rep.  No.   99-962,  99th Cong.,  2d Sess. 254-55 (1986).
 Use of "permanent" storage  containers or  other containment technology
 does not qualify as  permanent  immobilization under this provision.
      Finally,  under  either  of  the two circumstances in Section
 122(f)(2),  the special  covenant applies only to those hazardous
 substances  actually  transported offsite or  destroyed, eliminated,
 or  permanently immobilized.  Thus to the  extent that hazardous
 substances  remain  onsite, the  standard  reopeners for future
 liability must be  included  in  the covenant  not to sue.  For
 example, Site  X has  soil contamination  to a depth of 30 feet but
 under  present  health standards  only the first five feet need to
 be  incinerated.  Assuming the  incineration  process meets the
 requirements of Section 122(f)(2)(B), a special covenant may be
 granted  for the incinerated soil but under no circumstances would
 a covenant not  to  sue for future liability without the standard
 reopeners be issued  for the contaminated  lower 25 feet of soil.
 IV.  Status of  Interim Settlement Policy
     The Interim Settlement Policy remains  in effect to the extent
not contradicted by SARA or by  this or any other subsequent
guidance.  Nonetheless, a number of points from that policy are
worth re-emphasizing:
     1)  covenants  not to sue will not be issued for redisposal
         liability  unless Section 122(f)(2)(A) applies;
     2)  covenants  not to sue in agreements where EPA has performed
         the remedy and EPA is seeking only the recovery of its

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                                                       9834.8
                               -  19 -
          coses  should  be no more expansive than covenants not to
          sue  in consent decrees where the responsible parties
          agree  to  do the remedy;
      3)   a  covenant not to sue may be given only to the responsible
          party  providing consideration for the covenant;
      4)   the  covenant  not to sue must not cover any claims other
          than those involved for that site - thus unless  unusual
          factors are present the covenant not to sue will apply
          only to claims under Sections 106 and 107 of CERCLA and
          Section 7003  of RCRA;
      5)   the  covenant  not to sue must expressly be limited to
          civil  claims;
      6)   a  covenant not to sue for a remedial investigation and
          feasibility study or a removal action must be limited to
          the  work  actually completed;
      7)   a  covenant not to sue regarding natural resources may
          only be provided by the Federal trustee responsible for
          those  resources;
     8)   responsible parties must release any related claims
          against the Hazardous Substances Superfund.
DISCLAIMER
     The  policies  and  procedures established in this document
are intended  solely for the guidance of government personnel.
They are  not  intended  and cannot be relied upon to create any
rights, substantive or procedural, enforceable by any party
in litigation with the United States.  The Agency reserves the.

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                                                         9834.8
                             - 20 -
right to act at  variance with these policies  and procedures and

to change them at any time without public  notice.

Attachment

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                                                       9834-8
                      COVENANT NOT TO  SUE

L.  A.  Except as specifically provided  in Subparagraph C, Che
      United States  covenants not  to sue the settling parties for
      Covered Matters.   Covered Matters shall  include any and all
      civil liability  to the United States  for causes of action
      arising under  §§  106  and 107(a)  of CERCLA and S 7003 of RCRA
      relating to  the  Site.
   B.  With  respect to  future liability, this covenant not to sue
      shall take effect upon certification  by  EPA of the completion
      of  the remedial  action.   A determination regarding certifi-
      cation of completion  will be made by  EPA within [one year]
      of  successful  completion of  the  activities listed in
      Appendix 	.
   C.  Notwithstanding  any other provision in this Consent Decree,
      the United States reserves the right  to  institute proceedings
      in  this  action or in  a new action (1) seeking to compel
      Settling Parties  to perform  additional response work at the
      Site  or  (2)  seeking reimbursement of  the United States's
      response coses,  if:
         1)   for  proceedings prior to EPA  certification of
              completion of the remedial action,
                (i) conditions at the Site, previously unknown
                to  the United States, are  discovered after  the
                entry  of this Consent Decree, or
                (ii)  information  is received, in whole or in part,
                after  the  entry of this Consent Decree,

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                                                          9834.8
                               -  2  -

               and  these previously unknown conditions or this
               information  indicates  that the remedial action is
               not  protective of  human health and the environment;
           2)   for  proceedings  subsequent to EPA certification
               of completion of the remedial action,
                 (i) conditions  at the Site, previously unknown
                 to the United States, are discovered after the
                 certification of completion by EPA, or
                 (ii) information received, in whole or in part,
                 after the certification of completion by EPA,
               and  these previously unknown conditions or this
               information indicates  that the remedial action is
               not  protective of human health and the environment.
D.   The United States's right to institute proceedings in this
     action or in  a new action seeking to compel Settling
     Parties to perform additional response work at the Site
     or seeking reimbursement of the United States for
     response costs at the Site,  may only be exercised where
     the conditions in subparagraph C are met.   [Caution: check
     to insure that this subparagraph does not waive other
     reserved rights in the decree relating to additional response
     work].
E.   Notwithstanding any other provision in this Consent Decree,
     the covenant not to sue in subparagraph A shall not relieve
     the settling parties  of their obligation to meet and maintain
     compliance with the requirements set forth in this Consent

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                                                 9834.8
                        - 3 -
Decree including  the Record of Decision and Remedial Design

for the Site which is incorporated  herein.

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