3EPA
United State*
Environmental Protection
Agency
Off ic« of
Solid Waste and
Emergency Reaponae
Agancy
En>argancy Response
DIRECTIVE NUMBER: 9835.14
. V
TITLE: Submittal of Ten-Point Settlement Analyses
for CERCLA Consent Decrees
APPROVAL DATE: -August n, 1989
EFFECTIVE DATE: August n, 1989
ORIGINATING OFFICE: OWPE/OE
Q FINAL
D DRAFT
LEVEL OF DRAFT
— Signed by AA or DAA
D B — Signed by Office Director
DC — Review & Comment
REFERENCE (other documents):
OS WER OS \NER OS WER
VE DIRECTIVE DIRECTIVE Di
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EPA Form 1315-t7 (Rev. S-17) Previous editions are obsdete.-
OSWER OSWE| OSWER O
VE DIRECTIVE XBlRECTIVE DIRECTIVE
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ussy
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON D C. 20460
Zff--t Cf
A'JG I I 1989 SOL.OWASTSAN3EVe«GENCvo6«™e
OSWER Directive #9833. i*
MEMORANDUM
SUBJECT: Submittal of Ten-Point Settlement Analyses for CERCLA
Consent Decrees
FROM: /ruce M. Diamond,
Office of Waste Programs Enforcement
I^Glenn L. Unterberger, Associate Enforcemen
Office of Enforcement and Compliance Monitoring/
TO: Waste Management Division Directors, Regions I-X
Regional Counsel, Regions I-X
The purpose of this memorandum is to ensure the adequacy of
information provided in the "ten-point" analyses of proposed CERCLA
settlements. A good ten-point analysis is required for all such
settlements and will help provide for timely Headquarters review
and concurrence of proposed settlements under the revised "CERCLA
civil Judicial Settlement Authorities Under Delegations 14-13B and
14-14E" (June 17, 1988).
Headquarters uses these ten-point documents for information
analyses, responses to Congress and for Congressional hearings, in
addition to using then as a basis for concurrence. For these
reasons we would like to stress the importance of preparing and
transmitting to OECM and OWPE a thorough 10-point analysis for all
settlements, including those directly submitted to DOJ for lodging.
As you are aware, the December 5, 1984 "Interin CERCLA
Settlement Policy" (Attachment i) lays out the ten settlement
criteria to be used in evaluating all CERCLA settlements The
current delegations, the level of involvement of Headquirters
staff, and the ongoing Congressional overt .l.'.yht of CERCLA
settlements in individual cases necessitates % thorough, corcise,
ano logical written analysis of the werms of a-: agreement c.nd a
clear presentation of the background arse history o* the ov.se in the
transifittal to Headquarters.
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To clarify this inf orrna.fe-ro'rr'and to ~e~n*ure your inclusion cf
all relevant information^ Attachment2__j^i'i:erates the settlement
criteria and includes Csu^pjagfrod—tte"adTngs and content for the
transmittal document. We would like to encourage the reduction of
paperwork where possible and while Attachment 2 provides for
extensive elaboration on each topic, we feel that the ten-point
should be tailored to the particular case. For example, for a d&
minimis settlement or a cost recovery settlement, the analysis may
be shorter due to the elimination or very brief summary of certain
points, or the document may not require extensive detail on aspects
of the case where the Settlement Decision Committee has been
involved, or where Headquarters has been significantly involved
(participation in negotiations or specific issue resolution at an
upper management level). It should be noted that if the agreement
is a partial settlement, a strategy for pursuit of non-settlers
identifying the timing of any subsequent actions should be included
in the settlement package.
I hope that this will assist you and your staff in preparation
of settlement packages and give you a better understanding of the
information Headquarters needs for full comprehension of a
settlement.
Attachments
cc: .ERCLA Enforcement Branch Chiefs
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. S*04«0
OB-56B4
MEMORANDUM
i*CLA Sattlamant Policy
sfstint Administrator
Emergency Rasponsa
a M. Thomas
of Solid
.
Courtn«y H. Prver
ant Administrator
and Compliance Monitoring
P. Benry/MjaMclit7 Il» Assistant Attorney Ganaral
Land andVJihtural Resource* Division
Department of Juatiea
TO: Regional Administrators, Ragiona X-X
This memorandum aats forth tha ganaral principles governing
privata party settlements under CERCLA, and specific procedures
for tha Regions and Headquarters to usa in assaasing privata
party settlement proposals. It addresses tha following topics:
1. ganaral prineiplas for EPA review of private-party cleanup
proposalai
2. management guidalinea for negotiation}
3. factors govarning ralaaaa of information to potentially
responsible parties}
4. criteria for evaluating settlement offers}
S. partial cleanup proposals}
€. contribution among responsible parties}
7. releases end covenants not to suej
t. targets for litigation}
t. timing for negotiations}
10. management and review of settlement negotiations.
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AfPLICABILITY
This memorandum incorporates the draft Hazardous Waste
Cat* Settlement Policy, published in draft in December of
1983. Zt is applicable not only to Multiple party cases but
to all civil hazardous wast* enforcement cases under Superfund.
It is generally applicable to imminent hazard enforcement
actions under section 7003 of RCRA.
This policy establishes criteria for evalua'-'^g private
party settlement proposals to conduct or contrit to the
funding of response actions, including removal ana remedial
actions. It also addresses settlement proposals to contribute
to funding after a response action has been completed. It
does not address private-party proposals to conduct remedial
investigations and feasibility studies. These proposals are
to be evaluated under criteria established in the policy guidance
from Lee H. Thomas, Assistant Administrator, Office of Solid
Waste and Emergency Response, and Courtney Price, Assistant
Administrator, Office of Enforcement and Compliance Monitoring
entitled • Participation of Potentially Responsible Parties in
Development of Remedial Investigations and Feasibility Studies
under CERCLA". (March 20, 1904)
X. General Principles
The Government's goal in implementing CERCLA is to achieve
effective and expedited cleanup at as many uncontrolled hazardous
waste facilities as possible. To achieve this goal, the Agency
is committed to a strong and vigorous enforcement program. The
Agency has made major advances in securing cleanup at some of
the nation's worst hazardous waste sites because of its d»^on*trate<
willingness to use the Fund and to pursue administrative -d
judicial enforcement actions. Zn addition, tha Agency has obtained
kay decisions, on such issuas as joint and savaral liability,
which have further advanced its anforcament afforts.
Tha Agency recognizes, however, that Fund-financed cleanups,
administrative action and litigation will not be sufficient to
accomplish CERCLA'a goals, and that voluntary elaanups are
essential to a successful program for elaanup of tha nation's
hazardoua waste sites. Tha Agancy is therefore re-evaluating
its •fttlmmmnt policy, in light of three yaars axpariance with
negotiation and litigation of hazardous waste casas, to remove
or minimi** if possible tha impediments to voluntary elaanup.
As • result of this reassessment, tha Agancy has identified
tha following general principlas that govarn its Superfund
•nforcement programt
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The goal of the Agency in negotiating private party cleanup
and in settlement of hazardous waste cases .has been and will
continue- to be to obtain complete-cleanup by the responsible
parties, or collect 100% of the costs of the cleanup action.
negotiated private party actions are essential to an effective
program for cleanup of the nation's hazardous waste sites.
An affective program depends on a balanced approach relying
on a mix of Fund-financed cleanup, voluntary agreements
reached through negotiations, and litigation. Fund-financed
cleanup and litigation under CCRCLA will not la themselves
be sufficient to assure the success of this cleanup effort.
Zn addition, expeditious cleanup reached through negotiated
settlements is preferable to protracted litigation.
A strong enforcement program is essential to encourage
voluntary action by PRPs. Section 106 actions are particularly
valuable mechanisms for compelling cleanups. The effectiveness
of negotiation is integrally related to the effectiveness of
enforcement and Fund-financed cleanup. The demonstrated
willingness of the Agency to use the Fund to clean up sites
and to take enforcement action is our most important tool
for achieving negotiated settlements.
The liability of potentially responsible parties it strict,
joint and several, unless they can clearly demonstrate that
the ham at the site Is divisible* The recognition on the
part of responsible parties that they »ay be) jointly and
severally liable is a valuable impetus for these parties to
reach the agreements that are necessary for successful
negotiations. Without such an Impetus, negotiations run a
risk of daisy because of disagreements over the particulars
of each responsible party's contribution to the problems at
the sits.
The Agency rscognisss that the factual strengths and wesknesses
of a particular case ars rslsvant in evaluating settlement
proposals. The Agency also recognises that courts may consider
differences among defendants in allocating payments among
parties held jointly and severally liable under CERCLA. while
these are primarily the eoncarns of PRPs, the Agency will also
consider a PHP's contribution to problems at the sits, including
contribution of vasts, in asssssing proposals for settlement and
in identifying targets for litigation.
i
•action IOC of CERCLA provides courts with jurisdiction to
grant such ralief as the public intsrsst and the equities of
the) csss may require. Zn asssssing proposals for settlement
and identifying targets for litigation, the Agency will
consider aggravating and mitigating factors and sppropriste
equitable factors.
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In many circumstances, cleanups can be started more quici^y
when private parties do the work themselves, rather than
provide money to the Fund. It Is therefore preferable for
private parties to conduct cleanups themselves, rather than
Simply provide funds for the States or Federal Government
to conduct the cleanup.
The Agency will create a climate that is receptive to private
party cleanup proposals. To facilitate negotiations, the
Agency vill stake certain inf onset ion available to private
parties. PRPs will normally have an opportunity to be
involved in the studies used to determine the appropriate
extent of remedy. The Agency will consider settlement
proposals for cleanup of less than 1001 of cleanup activities
or cleanup costs. Finally* upon settling with cooperative
parties, the government will vigorously seek all remaining
relief, including costs, penalties and treble damages where
appropriate, from parties whose recalcitrance made a complete
settlement impossible.
The Agency anticipates that both the Fund and private resources
may be used at the same site in some circumstances. When
the Agency settles for less than 100% of cleanup costs, it
can use the Fund to assure that site cleanup will proceed
expeditiously, and then sue to recover these costs from non-
settling responsible parties. Where the Federal government
accepts less than 100% of cleanup costs and no financially
viable responsible parties remain, Iuperfund monies may be
used to aake up the difference.
The Agency recognises the value of some measure of finality
in determinations of liability and in settlements generally.
PRPs frequently want some certainty in return for assuming
the costs of cleanup, and we> rvcognise that this will be a
valuable) incentive for private) party cleanup. UPs frequently
seek • final determination of liability through contribution
protection, releases or covenants not to sue). The Agency
vill consider ralasses fro* liability in appropriate situ-
ations, and vill also consider contribution protection in
limited cirenametences. The Agency vill also take aggressive
enforcement action against those) parties whose recalcitrance
prevents settlements. In bringing coat recovery actions,
th« Agency will alao attempt to raiaa any remaining claims
unto* CIKCLA Motion 106, to the extent practicable.
tinder of this memorandum sets forth apacific
policiee for implementing thaaa general prineiplaa.
Section XX aets forth the Management guidelines for negotiating
vith leas than all responsible parties for partial settlement*.
Thia aection reflects the Agency's willingness to be flexible
by considering offsra for cleanup of less than 100% of cleanup
activities or costs..
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Section in »«ts forth guidelines on the release of
information. The Agency recognizes that adequate information
facilitates Bore successful negotiations. Thus, the Agency
will combine a vigorous program for obtaining the data and
information necessary to facilitate settlements with a program
for releasing information to facilitate communications among
responsible parties.
Sections IV and V discuss the criteria for evaluating
partial settlements. As noted above, in certain circumstances
the Agency will entertain settlement offers from PRPs which
extend only to part of the site or part of the costs of cleanup
•t a site. Section IV of this memo sets forth criteria to be
used in evaluating such offers. These criteria spply to all
eases. Section V sets forth the Agency's policy concerning
offers to perforB or pay for discrete phases of sn approved
cleanup.
Sections VI and VII relate to contribution protection and
releases fro* liability. Where appropriate, the Agency nay
consider contribution protection and limited releases from
liability to help provide some finality to settlements.
Section VIII sets forth criteria for selecting enforcement
cases and identifying targets for litigation. As discussed
above, effective enforcement depends on careful case selection
and the careful selection of targets for litigation. The Agency
will apply criteria for selection of cases to fccus sufficient
resources on cases that provide the broadest possible enforcement
impact. In addition, targets for litigation will be identified
in light of the willingness of parties to perform voluntary
cleanup, as well as conventional litigation management concerns.
Section IX sets forth the requirements governing the timing
of negotiations and section X the provisions for leadquarter*
review. These sections address the) need to provide the Regions
with increased flexibility in negotiations and to change Headquarter
review in order to expedite site cleanup.
XX. Management Guidelines for Begotiation
Aa • guideline)* the Agency will negotiate only if the
initial offer frosi Pftps constitutes a substantial proportion of
the costs of cleanup at the site, or a substantial portion of
the) nssdmd remedial action. Entering into discussions for less
than s substantial proportion of cleanup costs or remedial action
needed at the sits, would not be an effective use of government
resources. Mo specific numerical threshold for initiating
negotiations has been established.
In deciding whether to start negotiations* the Regions
should weigh the potential resource demands for conducting
negotiations against the likelihood of getting 100% of costs
or a complete remedy.
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Where the Region proposes to negotiate for • partial
settlement involving less than the total'costs of cleanup, or
• complete remedy, the Region should prepare as part of its
Case Negotiations Strategy a draft evaluation of the case
using the settlement criteria identified in section IV. The
draft should discuYs how each of the factors in section XV
applies to the site in question, and explain why negotiations
for less than all of the cleanup costs, or a partial remedy,
are appropriate. A copy of the draft should be forwarded to
Headquarters. The Headquarters review will be used to identify
major issues of national significance or issues that may involve
significant legal precedents.
In certain other categories of eases, it may be appropriate
for the Regions to enter into negotiations with PRPs, even
though the offers fron PRPs do not represent a substantial
portion of the costs of cleanup. These categories of cases
include:
• administrative settlements of cost recovery actions
where total cleanup costs were less than $200,000;
• claims in bankruptcy;
• administrative settlements with de minimis contributors
of wastes.
Actions subject to this exception are administrative
settlements of cost recovery cases where all the work at the
site has been completed and all costs have been incurred. The
figure of $200,000 refers to all of the costs of cleanup. The
Agency is preparing more detailed guidance on the appropriate
fora of such settlement agreements, and the types of conditions
that must be included.
Negotiation of claims in bankruptcy may involve both present
owners* where the United States may have an administrative costs
claim, and other parties such as past owners or generators,
where the United States may be an unsecured potential creditor.
The Regions should avoid becoming involved in bankruptcy proceedings
if there is little likelihood of recovery, and should recognize
the risks involved in negotiating without creditor status. It
•ay b« appropriate to request OOJ filing of a proof of claim.
Further fuidance is provided in the Memorandum from Courtney
Price sutitled "Information Regarding CIRCLA Enforcement Against
•ankrupt Parties,* dated Nay 24, 1914.
Xn negotiating with de minimia parties, the Regions should
limit their efforts to low volume, lew toxicity disposers who
would not normally make a significant contribution to the costs
of cleanup in any case.
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In considering settlement offers from £e minimis contributors,
the Region should normally focus on achieving cash settlements.
Regions should generally not enter into negotiations for full
administrative yor judicial settlements with releases, contribution
protection, or other protective clauses. Substantial resources
should not be invested in negotiations with de minimis contributors,
In light of the Halted costs that may be recovered, the time
needed to prepare the necessary legal documents, the need for
•eadquarters review, potential res judicata effects, and other
effects that de minimis settlements »ay have on the nature of
the case remaining to the Government.
Partial settlements may also be considered in situations
where the unwillingness of a relatively small group of parties
to settle prevents the development of a proposal for a substantial
portion of costs or the remedy. Proposals for settlement in
these circumstances should be assessed under the criteria set
forth in section IV.
Earlier versions of this policy included a threshold for
negotiations, which provided that negotiations should not be
commenced unless an offer was made to settle for at least 80%
of the costs of cleanup, or of the remedial action. This
threshold has been eliminated from the final version of.this
policy. It must be emphasized that elimination of this threshold
does not mean that the Agency is therefore more willing to
accept offers for partial settlement. The objective of the
Agency is still to obtain complete cleanup by PRPs, or 100% of
the costs of cleanup
ZIZ. Release of Information
The Agency will release information concerning the site
to PRPs to facilitate discussions for settlement among PRPs.
This information will include:
- identity of notice letter recipients;
- volume and nature of wastes to the extent identified as
tent to the) aitai
- ranking by volume of material sent to the aitt, if available
In etetarmlning the type of information to be rsleated,
the Jtegios) should eonaider the possible impacts on any potential
litigation. The legions should take steps to aaaura protection
of confidential and deliberative materials. The Agency will
generally net ralaaaa actual avidantiary material. The Region
aheuld atata on each ralaaaad summary that it ia preli»inary,
that it waa furnished in the eouraa of compromise negotiation*
(Pad. Rules of Evidence 408), and that it ia not binding on
the Federal Government.
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This information release should be preceded by and combined
with a vigoroua program for collecting information from responsi
parties. It.remains standard practice for the Agency to use
the information gathering authorities of RCRA snd CCRCLA with
respect to all PRPs at a site. This information release should
generally be conditioned on a reciprocal release of information
by PRPs. The information request need not be simultaneous, but
EPA should receive the information within a reaaonable time.
IV. Settlement Criteria
The objective of negotiations is to collect 100% of cleanup
costs or complete cleanup from responsible parties. The Agency
recognites that* in narrowly limited circumstances* exceptions
to this goal may be appropriate* and has established criteria
for determining where such exceptions are allowed. Although
the Agency will consider offers of leas than 100% in accordance
with this policy* it will do so in light of the Agency's position,
reinforced by recent court decisions* that PRP liability is
strict* joint and several unless it can be shown by the PRPs
that injury at a aite is clearly divisible.
Based on a full evaluation of tha facts and a comprehensive
analysis of all of tha listed criteria* the Agency may consider
accepting offers of lass than 100 pareant. Rapid and affective
aettlement depends on a thorough evaluation* and an aggressive
• Information collection program is naceasary to prepare effective
evaluations. Proposals for laaa than total settlement should
be assessed using tha criteria idantifiad below.
1. Volume of wastes contributed to sita by each PRP
Information concerning tha volume of wastes contributed
to tha sita by PRPs should ba collected, if available, and
avaluatad in aaeh case. Tha volume of wastes is not tha only
criterion to ba considarad* nor may it ba tha most important.
A amall quantity of waste may cost proportionately more to
contain or remove than a larger quantity of a diffarant waste.
• of vasts »ay contribute significantly and
•owaver* tha
directly to tha distribution of contamination en tha surface
and subsurface (including groundwater), and to tha complexity
of removal of the contamination. In addition, if tha properties
of sll vsstes at tha sita sra relatively equal, tha volume of
wastes contributed by tha PRPs provides a convenient, aasily
sppliad criterion for measuring whether a PHP's aettlement
offar may ba reaaonable.
This doas not m«an, however, that PRPs will ba> required to
pay only thair proportionate share basad on volume of contribution
of wastaa to tha sita. At many sites, thara will ba vastes
for which PRPs cannot ba idantifiad. If idantifiad* PRPs stay
ba unable to provide funds for cleanup. Private party funding
for cleanup of those wastes would* therefore, not ba available
if volumetric contribution wara tha only critaria.
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Therefore, to achieve th« Agency's goal of obtaining 100
percent of cleanup or the cost of cleanup, it will be necessary
in many cases to require a settlement contribution greater than
the percentage 9' wastes contributed by each PRP to the sit*.
These costs can be obtained through the application of the theory
of Joint and several liability where the harm is indivisible,
and through application of these criteria in evaluating settlement
proposals.
2. Nature of the wastes contributed
The human, animal and environmental toxicity of the hazardous
substances contributed by the PRPa, ita mobility, persistence
and other propertiea are important faetora to conaider. As
noted above, a small.amount of waatea, or a highly mobile waste,
may coat more to clean up, dispose, or treat than laas toxic or
relatively immobile wastes. In addition, any diaproportionate
adverse affecta on the environment by tha praaence of wastes
contributed by those PRPs should be considered.
If a waste contributed by one or more of the parties offering
a aettlement disproportionately increaaes the coats of cleanup
at tha aite, it may be appropriate for partiaa contributing such
waate to bear a larger percentage of cleanup coata than would be
tha caaa by uaing aolely a volumatric baais.
3. Strength of avidence tracing tha waataa at tha aite to the
aettling partiea
Tha quality and quantity of tha Government'a avidance
connecting PRPa to tha waataa at tha aita obvioualy affects
tha aettlament valua of tha Government'a casa. Tha Government
must ahow, by a praponderunca of tha evidence, that tha PRPs
ara connected with tha waataa in ona or more of tha ways provided
in Section 107 of CERCLA. Therefore, if tha Government's
avidanca against s particular PRP is weak, wa should waigh
that waaknass in evaluating a aattlament offar from that PRP.
On tha other hand, where indivisible harm is shown to
•list, under tha theory of joint and several liability tha
Government ia in a position to collect 100 % of tha cost
of elaamip from all partias who have contributed to a aita.
Therefore, whara tha quality and quantity of tha Government's
avidanoa appear a to ba atrong for aatablishing tha PRP's
liability* tha Government ahould raly on tha atrength of its
•vidanca and net decrease tha aettlament valua of ita easa.
Oiacharglng such ma from liability in a partial aattlament
without obtaining a aubstantial contribution may laava tha
Government with non-tattling partias whosa involvamant at the
aita may ba mora tanuous.
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In any •valuation of a settlement offer, the Agency
should weigh the amount of information exchange that has
occurred before the settlement offer. The more the Government
knows about thf evidence it has to connect the settling parties
to the site, the better this evaluation will be. The inforwatiol
collection provisions of RCRA and/or CERCLA should be used to
develop evidence prior to preparation of the evaluation.
4. Ability of the settling parties to psy
Ability to pay is not s defense to sn action by the Government.
Nevertheless, the evaluation of a settlement proposal should
discuss the financial condition of that party, and the practical
results of pursuing a party for more than the Government can
hope to actually recover. In cost recovery actions it will be
difficult to negotiate a settlement for more than a party's
assets. The Region should also consider allowing the party to
reimburse the Fund in reasonable installments over a period of
time, if the party is unable to pay in a lump sum, and install-
ment payments would benefit the Government. A structured
settlement providing for payments over time should be at a
payment level that takes into account the party's cash flow.
An excessive amount could force a psrty into bankruptcy, which
will of course make collection very difficult. See the memorandum
dated August 26, 1983, entitled "Cost Recovery Actions under
Section 107 of CERCLA' for additional guidance on this subject.
S« Litigatlve risks in proceeding to trial
Litigative risks which might be encountered at trial and
which should weigh in consideration of any settlement offer
include traditional factors such ass
a. Admisslbility of the Government's evidence
Zf necessary Government evidence is unlikely to be admitted
in a trial because of procedural or substantive problems in the
acquisition or creation of the evidence, this infirmity should
be) considered aa reducing the Government's chance of success
and, therefore, reducing the amount the Government should
•zpect to receive in a settlement.
b. adequacy of the Government's evidence
Certain aspects of this point have already been discussed
above, lovever, it deserves mention again because the
the Government's eaaa depends en substantial quantities
of sampling, analytical and other technical data and eipert
testimony. If the evidence In support of the Government's
caae is Incomplete or based upon controversial science, or if
the Government's evidence is otherwise unlikely to withstsnd
the scrutiny of a trial* the amount that the Government might
axpect to receive) in a settlement will be reduced.
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c. Availability of defenses
In th* unlikely *v*nt that on* or nor* of th* ••tiling parties
app*ars to hav*'a defense to th* Government's action und«r section
10?(b) of CERCLA, th* Government should expect to receive less in
a s*ttl*ment from that PRP. -Availability of on* or mor* defenses
to on* PRP which ar* not common to all PRP» in the eas* should
not, however, low*r th* expectation of what an *ntir* offering
group should pay.
<• Public int*r*st considerations
Th* purpose of site cleanup is to protect public health
and the environment. Therefore, in analysing a settlement proposal
the timing of the cleanup and the ability of the Government to
clean up the site should be considered. For example, if the state
cannot fund its portion of a Fund-financed cleanup, a private-party
cleanup proposal may be given more favorable consideration than
one received in a case where the State can fund its portion of
cleanup costs, if necessary.
Public interest considerations also include the availability
of Federal funds for necessary cleanup, and whether privately
financed action can begin more quickly than Federally-financed
activity. Public Interest concerns Bay be) used to justify
a settlement of lass than 100% only when there la a demonstrated
need for a quick remedy to protect public health or the environment,
7. Precedential value
Zn aone cases, the factual situation aujy be conducive to
establishing a favorable precedent for future Government actions.
For example, strong ease law can be developed in cases of first
impression. Zn addition, settlements in such cases tend to
become precedents in themselves, and are examined extensively by
PRPs in other cases. Settlement of such cases should always be
on terns most favorable to the Government. Where PUPs will not
settle on such tens, and the quality and quantity of evidence
is strong, it may be) in the overall interest of the Government
to try the casa.
S. Val»e of obtaining a preaant sun cartain
Xf SJDaay can be obtained now and turned over to the Fund,
where it e»n earn interest until tha time it is spant to clean
up a site, tha net present value of obtaining tha sum offared
in settlement now can be computed against tha possibility of
obtaining a larger sum in tha futura. This calculation may show
that tha net prasant value of tha sum of farad in settlement is, in
reality, higher than tha amount tha Government can expect to obtain
at trial. EPA haa davalopad an economic modal to assaas these and
othar related economic factors. Nora information on this nodel
can be obtained from the Director, Offiea of Haste Programs Enforces
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9. Inequities and aggravating factora
All analyses of aattlement propoaala ahould flag for the
daeiaion makers a.ny apparent inequities to the settling parties
inherent in the Government's caae, any apparent inequities to
others if the settlement proposal is accepted, and any aggravating
factors. However, it muat be understood tnat tha statute
operates on the underlying principle of strict liability, and
that equitable matters are not defanaaa.
10. Nature of the casa that remains after settlement
All settlement evaluations should sddress the nature of
the case that remains if the settlement is accepted. Per
example, if there are no financially viable parties left to
proceed against for the balance of the cleanup after the
settlement, the settlement offer should constitute everything
the Government expects to obtain at that site. The questions
are: What does the Government gain by settling this portion
of the case? Does the settlement or its terms harm the remaining
portion of the casa? Will the Government have to expend tha
same .amount of resources to try the remaining portion of the
case? if so, why should the settlement offer be sccepjted?
This analysis is extremely important and should come at
the conclusion of the evaluation.
V. Partial Cleanups
On occasion, PRPs may offer to perform or pay for one
phase of a site cleanup (such as a surface removal action) but
not commit to any other phase ef the cleanup (such as ground
water treatment). In some circumstances* it may be appropriate
to enter into settlements for such psrtial cleanups, rather
than to resolve all issues in one settlement. Por example, in
some cases it is necessary to conduct initial phases of site
cleanup in order to gather sufficient data to evaluate the
need for and type) of work to be done on subsequent phases. In
such cases, offers from PKPs to conduct or pay for less than
all phaaos of site cleanup should be evaluated in the same
manner amd by the same criteria as set forth sbove. Settlements
must bo limited to the phase or phases of work actually to be
perfomsd at tha site. This provision doss not cover preparation
of an sTX/PSf which ia covered by a separate guidance document:
Lee Thomas and Courtney Price's •Participation of Potentially
Besponsible Parties in HI/PS Development* (March 20, 1914).
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VI. Contribution Protection
Contribution among responsible parties is based on the
principle that,a jointly and severally liable party who has
paid all or a portion of a Judgment or settlement may be entitled
to reimbureenent from other jointly or severally liable parties.
When the Agency reaches a partial settlement with ao»e parties,
it will frequently pursue an enforcement action against non-settline
responsible parties to recover the remaining costs of cleanup.
If such an action it undertaken, there is a possibility that
those non-settlors would in turn sue settling parties. If this
action by nonsettling parties is successful, then the settling
parties would end up paying a larger share of cleanup costs
than was determined in the Agency's settlement. This is obviously
a disincentive to settlement.
Contribution protection in a consent decree can prevent
this outcome. In a contribution protection clause, the United
States would agree to reduce its judgment against the non-settling
parties, to the extent necessary to extinguish the settling
party's liability to the nonsettling third party.
The Agency recognises the value of contribution protection
in limited situations in order to provide some measure of
finality to settlements. Fundamentally, we believe that settling
parties sre protacted from contribution actions as a matter of
law, based on the Uniform Contribution Among Tortfeasors Act.
That Act provides that, where settlements ars entered into in
•good faith*, the settlors are discharged from 'all liability
for contribution to any othar joint tortfeasors.• To the extant
that this law is adopted as tha Federal rula of decision,
there will be no need for spacific clausas in consent agreements
to provide contribution protection.
Thar* has not yet been any ruling on tha issue. Thus,
the Agency may still be asked to provide contribution protaction
in the form of offsats and reductions in judgment. Zn determining
whether explicit contribution protection clauses are appropriate,
the Region should consider the following factorsi
• Explicit contribution protection elsuses are generally not
appropriate unless liability esn be clearly allocated, so
that the risk of raapportionment by a judge in sny future
action would be minis*!.
• Inclusion should depend on case-by-case consideration of
the law which is likely to be applied.
• The Agency will be more willing to consider contribution
protection in settlements that provide substantially all
the costs of cleanup.
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If a proposed settlement includes • contribution protection
clause, the Region should prepare a detailed justification
indicating why this clause is essential to attaining an adequate
settlement. The justification should include an assessment of
the prospect* of litigation regarding the clause. Any proposed
settlement that contains a contribution protection clause with
• potential ambiguity will be returned for further negotiation.
Any subsequent claims by settling parties against non-settlors
must be subordinated to Agency claims against these non-settling
parties. In no event will the Agency agree to defend on behalf
of a settlor, or to provide direct indemnification. The Government
will not enter into any form of contribution protection agreement
that could require the Government to pay money to anyone.
If litigation is commenced by non-settlors against settlors,
and the Agency became involved in such litigation, the Government
would argue to th« court that in adjusting equities among responsibl*
parties, positive consideration should be given to those who came
forward voluntarily and were a part of • group of settling PRPs.
VII. Releases from Liability
Potentially responsible parties who offer to wholly or
partially clean up a site or pay the costs of cleanup normally
wish to negotiate a release from liability or a covenant not
to sue as a part of the consideration for that cleanup or
payment. Such releases are appropriate in acaie circumstances.
The need for finality in settlements must be balanced against
the need to Insure that PRPs remain responsible for recurring
endangerments and unknown conditions.
The Agency recognises the current state of scientific
uncertainty concerning the impacts of hasardous substances,
our ability to detect them, and the effectiveness of remedies
at hasardous vasts sites. It is possible that remedial measures
will prove inadequate and lead to imminent and substantial
endangerments, because of unknown conditions or because of
failures in design, construction or effectiveness of the remedy.
Although the Agency approves all remedial actions for sites
on the afttional Priorities List, releases from liability will
not wCfcsmtieally be granted merely because the Agency has
approved the remedy. The willingness of the Agency to give.
expensive releases from liability is directly related to the
confidence the Agency has that the remedy will ultimately
prove effective) and reliable. In general, the Regiona will
have the flexibility to negotiate releases that are) relatively
expansive or relatively stringent, depending on the degree of
confidence that the Agency .haa in the remedy.
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Releases or covenants Butt also include certain recpeners
which preserve the right o£ the Government to seek additional
cleanup action and recover additional costs from rasponsible
partlas in a number of circumstances. They are also subject
to • variety of other limitations. These reopener clauses and
limitations ara described below.
Zn addition, the Agancy can addrass future problems at a
•it* by enforcement of the dacraa or order, rather than by
action under a particular reopener clauaa. Battlements will
normally specify a particular typa of remedial action to be
undertaken. That remedial action will normally be selected to
achieve a cartain specified laval of protaction of public
health and the environment. Whan settlements ara incorporated
into consent decrees or orders* the decrees or orders should
wherever possible include performance standards that set out
these specified levels of protection. Thus, the Agency will
retain its ability to assure cleanup by taking action to enforce
these decrees or orders when remedies fail to meet the specified
standards.
It is not possible to specify a precise hierarchy of
preferred remedies. The degree of confidence in a particular
remedy must be deternined on an individual basis* taking site-
specific conditions into account. Zn general, however, the
more effective and reliable the remedy* the more likely it ia
that the Agency can negotiate a more expansive release. For
example, if a consent decree or order commits a private party
to sieeting and/or continuing to attain health baaed performance
standards, there can be great certainty on the part of the
Agency that an adequate level of public health protection will
be met and maintained, as long aa the terms of the agreement
are met. Zn this type of csse, it may be) appropriate to negotiate
a more expanaive release than, for example, caaea involving
remedies that are solely technologybased.
Expansive releases may be more appropriate where the private
party remedy is a demonstrated effective alternative to land
disposal, auch as incineration, fueh releases are possible
whether the) hasardous material is transported off site for
treatment* or the) treatment takes place en site. Zn either
instance* the use of treatment can reault in greater certainty
that future problems will net occur.
Otfstr remedies »ay be less appropriate for expansive
release*, particularly if the consent order or agreement does
not include) performance standards. It «ay be appropriate in
such circumstances to negotiate releaaes that become sffactive
several years after completion of the remedial action, eo that
the) effectiveness and reliability of the technology can be
clearly demonstrated. The Agency anticipates that responsible
parties may be) able to achieve • greater degree of certainty
in settlements when the state of scientific understanding
concerning these technical issues has sdvanced.
\
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Regardless of the relative expanaiveneaa or stringency of
the relesse in other respects, at a minimum settlement documents
must include reopeners allowing the Government to modify terms
and conditions of the agreement for the following types of
circumstancesi f
• where previously unknown or undetected conditions that
arise or are discovered at the aite after the time of
the agreement may present an imminent and substantial
endangerment to public health, welfare or the
environment}
• where the Agency receives additional information, which
was not available at the time of the agreement, concerning
the scientific determinations on which the settlement
wss premised (for example, health effects associated
with levels of exposure, toxicity of hazardous substances,
and the appropriateness of the remedial technologies
for conditions at the site) and this additional information
indicates that site conditions may preaent an imminent
and substantial endangerment to the public health or
welfare or the environment.
In addition, release clauses must not preclude the Government
from recovering costs incurred in responding to the types of
imminent and substantial endangerments identified above.
In extraordinary circumstances, it may be clear after
application of the settlement criteria set out in section XV
that it is in the public interest to agree to a more limited
or more expansive release not subject to the conditions outlined
above. Concurrence of the Assistant Administrators for OSWER
and OECM (and the Assistant Attorney General when the release
is given on behalf of the United States) must be obtained
before the Government's negotiating team is authorised to
negotiate regarding such a release or covenant.
The extent of releases should be the same, whether the
private parties conduct the clesnup themselves or psy for
Federal Government cleanup. When responsible parties pay for
Federal Government cleanup, the release will ordinarily not
become effective until cleanup is completed and the actual
coata ot the cleanup are aacertained. Responsible parties
will thfffmfey bear the riak of uncertainties arising during
executsw of the cleanup. Zn limited circumstances, the
release may become effective upon payment for Federal Government
cleanup, if the payment includes a carefully calculated premium
or other financial instrument thst adequately insures the
Federal government against these uncertainties. Finally, the
Agency may be more willing to settle for less than the total
coata of cleanup when it ia not precluded by a release clause
from eventually recovering any additional coata that Bight
ultimately be incurred at a site.
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Release clause* are also subject to the following limitat icr.s:
* A release or covenant may be given only to the PR? providing
the consideration for the releaae.
4
• The releaae or covenant must not cover any claias other
than thoae involved in the case.
• The release must not address any criminal Batter.
' Releases for partial cleanups that do not extend to the
•ntire site must be limited to the work actually completed.
• Federal claims for natural resource damages should not be
released without the approval of Federal trustees.
• Responsible parties must release any related claims against the
United States, including the Hazardous Substances Response Fund.
• Where the cleanup is to be performed by the PRPs, the release
or covenant should normally become effective only upon the
completion of the cleanup (or phase of cleanup) in a manner
satisfactory to EPA.
• Release clauses should be drafted as covenants not to sue,
rather than releases from liability, where this fora may be
necessary to protect the legal rights of the Federal Government.
A release or covenant not to sue terminates or seriously
impairs the Government's rights of action against PRPs. Therefore,
the document should be carefully worded so that the intent of the
parties and extent of the matters covered by the release or covenant
•re clearly stated. Any proposed settlement containing a release
with a possible ambiguity will be returned for further negotiation.
VIII. Targets for Litigation
The Regions should identify particular cases for referral
in light of the following factorst
- substantial environmental problems exist?
- tarn) Agency's case has legal merit;
b ..—
• tfci saount of money or cleanup involved is significant;
• good Isgsl precedent is possible (cases should be rejected
where the potential for adverse precedent is substantial);
• ths evidence is strong, well developed, or espsbls of
development!
- statuts of limitations problems exist;
- responsible partiss are financially viable.
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Tha goal of the Agency is to bring enforcement action
wherever needed to asaure private party cleanup or to recover
costs. Tha following typaa of caaea are the highest priorities
for referralat *
• 107 actiona in which all coata have been incurred;
• combined 106/107 actions in which a significant phase has
baan completed, additional injunctive raliaf is needed and
idantifiad, and tha Fund will not be uaad;
- 106 actions which will not be tha subject of Fund-financed
claanup.
Referrala for injunctive raliaf may also ba appropriate
in casaa whan it is possible that Fund-financed claanup will
ba undertaken. Such rafarrals may be needed whara there are
potential statute of limitation concerns, or whara tha sita
has baan idantifiad as enforcement-lead, and prospects for
succaasful litigation ara good.
Regional offices ahould periodically raavaluata currant
targats for rafarral to determine if they meat tha guidelines
identified above.
As indicated before, under the theory of joint and several
liability the Government is not required to bring enforcement
action against all of the potentially responsible parties
involved at a site. Tha primary concern of the Government in
identifying targats for litigation is to bring a meritorious
case against responsible parties who have the ability to under-
take or pay for response action. The Government will determine
the targets of litigation in order to reach the largest manageable
number of parties, based on toxicity and volume, and financial
viability. Owners and operators will generally be the targat
of litigation, unless bankrupt or otherwise judgment proof.
Zn appropriate cases, the Government will consider prosecuting
claims in bankruptcy. The Government may also select targats
for litigation for limited purposes, such as site access.
Parties who are targeted for litigation are of course not
precluded from involving partiea who have not been targeted in
develoftmg settlement offers for consideration by the Government.
Xm determining the sppropriate targets for litigation, tha
Government will consider the willingness of parties to settle,
as demonstrated in the negotiation stage. Xn identifying a
manageable number of parties for litigation, the Agency will
conaider the recalcitrance or willingness to settle of the
parties who were involved in the negotiations. The Agency
will also consider other aggravating and mitigating factors
concerning responsible party actions in identifying targets
for litigation.
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Zn addition, it may b« appropriate, when the Agency is
conducting phased cleanup and haa reached a settlement for one
phase* to first sue only non-settling companies for the next
phase, assuming, that such financially viable parties are available.
This approach would not preclude auit againat aettling parties,
but non-settlors would be sued initially.
The Agency recognize* that Federal agencies nay be reaponaible
for cleanup costs at hazardous vast* sites. Accordingly, Federal
facilities will be issued notice letters end administrative orders
where appropriate. Instead of litigation, the Agency will use
the procedures established by Executive Orders 12088 and 12146
and all applicable Memoranda of Understanding to resolve issues
concerning such agency's liability. The Agency will take all
•taps necessary to encourage successful negotiations.
IX. Tinting of negotiations
Under our revised policy on responsible party participation
In HI/PS, PRPs have increased opportunities for involvement in
the development of the remedial investigations and feasibility
studies which the Agency uses to identify the appropriate remedy.
In light of the fact that PRPs will have received notice
letters and the information identified in section III of this
policy, prelitigation negotiations can be conducted in an
expeditious fashion.
The Negotiations Decision Document (HDD), which follows
completion of the RI/FS, makes the preliminary identification of
the appropriate remedy for the site. Prelitigation negotiations
between the Government and the PRPs should normally not extend
for more than €0 days after approval of the HDD. Zf significant
progress is not Bade within a reasonable amount of time, the
Agency will not hesitate to abandon negotiations and proceed
immediately with administrative action or litigation. It should
be noted that these steps do not preclude further negotiations.
Ex tensions can be) considered in complex cases where there is
no threat of seriously delaying cleanup action. Any extension of
this period must be predicated on having a good faith offer from
th« PRP* which* if successfully negotiated, will save the Government
substantial tla* and resources in attaining the cleanup objectives.
X. Manmm*»m>nt snd He view of Settlement negotiations
All aattlaattnt documents must receive concurrence from OWPE
and OECH-Waste, and be approved by the Assistant Administrator
of OCCN in accordance with delegations. The management guideline
discussed in faction XI allows the Regions to commence negotiations
if responsible parties make an initial offar for a substantial
proportion of the cleanup costs, sefore commencing negotiations
for partial settlements, the Regions should prepare a preliminary
draft evaluation of the case using the settlement criteria in
aaction XV of thia policy. A copy of this avaluation should
be forwardad to Headquarters.
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A final detailed •valuation of eettleraenta is required
when the Regions request Headquarters approval of these
settlements. This written evaluation should be submitted to
OICK-waste and OWPE by the legal and technical personnel on
the ease. These will normally be the Regional attorney and
technical representative.
The evaluation nenorandun should Indicate whether the
settlement la for 1001 of the work or cleanup costs. If this
figure la less than 1001, the memorandum should Include a
discussion of the advantages and disadvantages of the proposed
settlement aa measured by the criteria In section IV. The
Agency expects full evaluations of each of the criteria specified
In the policy and will return Inadequate evaluations.
The Regions are authorised to conclude settlements In certain
types of hazardous waste cases on their own, without prior
review by Headquarters or OOJ. Cases selected for this treatment
would normally have lower priority for litigation. Categories
of cases not subject to Headquarters review include negotiation
for cost recovery caaes under 1200,000, and negotiation of
claims filed in bankruptcy. In cost recovery cases, the Regions
should pay particular attention to weighing the resources
necessary to conduct negotiations and litigation against the
amounts that »ay be recovered, and the prospects for recovery*
Authority to appear and try eases before the Bankruptcy
Court would not be delegated to the Regions, but would be
retained by the Department of Justice. The Department will
file cases where an acceptable negotiated settlement cannot be
reached. Copies of settlement documents for such agreements
should be provided to OWE and OECN.
Specific details concerning these authorisations will be
addressed in delegations that will be forwarded to the Regions
under separate cover. Headquarters is conducting an evaluation
of the effectiveness of existing delegations, and is assessing
the possibility of additional delegations.
note on Purpose and Uses of this Hemorsndum
The policies and procedures set forth here, and internal
Government procedures adopted to implement these policies, are
intended a* fuIdanee to Agency and other Government employees.
They do not •enstltuts rulemsklng by the Agency, and Bay not be
relied en to create • substantive or procedural right or benefit
enforceable by any other person. The Government may take action
that is at variance with the policies and procedures in this
memorandum.
It you have any questions or comments en this policy, or
problems that need to be addressed in further guidance to
implement this policy, pleass contsct Gene A. Lucero, Director
of the Office of Wests Programs enforcement, (PTS JS2-4I14), or
Richard Nays, Senior Enforcement Counsel, (PTS Ji2-4137).
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. - ar.s~ itta.i of .en-Point Settlement Analysis
I. Highlights: A brief description of important issues in the
case/terms of the settlement. If Headquarters consultation
or concurrence is required, the nature of such consultation
or concurrence should be noted. (This might include mention
of extraordinary circumstances language, mixed funding
settlement, forgiveness of past costs, etc.) Settlement
incentives or disincentives used should be clearly identified
(§106 AOUs, carve outs, delayed effective date of AOUs, etc.)
This section should also include a discussion of the extent
to which aspects of the remedy have changed and how any
modifications are consistent with the ROD.
II. Terms: Clear summary1 of financial terms including:
1. total value of the settlement in dollar figures
and as a percentage of the total case (any
mixed funding should be subtracted from total
value of the remedy to achieve this sum)
2. total value of the remedy
3. total amount of past costs (including indirect
costs and pre-judgement interest), settlement
dollar amount and percentage of total past
costs
4. for mixed funding, financial terms of the
preauthorization (percentage and caps), portion
of mixed work, amount of cashout; also,
reference to criterion 10, the nature of the
case that remains after settlement. (Discuss
pursuit of non-settlors in Section IV para 10)
5. for d.e minimis. premiums, reopeners, amount of
past costs de minimia parties will pay, where
work dollars will go
6. outstanding dollars, reference to strategy to
recover these
III. History/Background: A concise presentation of relevant facts
including information on the site type (landfill, recycler,
industrial park, dump site, etc), and basic PRP information
(owner/operator, multi-generator). Include information on
settling PRPs and non-settling PRPs.
fA summary chart may be a useful alternative to a narrative
summary. A sample standard format is attached. This information
will be input into the settlement database maintained by OWPE.
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IV. Settlement Criteria (See 50 Fed. Reg. 5034, February, 1985
(Interim CERCLA Settlement Policy):
1. Volume of wastes contributed to site by each PRP:
Statement on volumetric contribution of settling parties,
percentage of the whole, amount contributed by de minimis
parties, if applicable; include statement on how these
conclusions were drawn (volumetric ranking, N3AR)
2. Nature of the wastes contributed: Type of waste and
medium contaminated
3. Strength of evidence tracing the wastes at the site to
the settling parties: Information available on each
PRP; discussion of issues, including divisibility of
harm, weak evidence on individual PRP
4. Ability of the settling parties to pay: Financial
viability of all parties;
5. Litigative risks in proceeding to trial:
a. Admissibility of Government's evidence: Any
issues relating to the acquisition or creation of
the evidence
b. Adequacy of the Government's evidence: Statement
on sufficiency, quality of evidence
c. Availability of defenses: Potential for any
settler to claim a 5107(b) or other defense
6. Public interest considerations: Community and state
roles (e.g., whether state could finance cleanup),
timing considerations (who can do it quicker)
7. Precedential value: Description of the issue or
situation
8. Value of obtaining a present sun certain: Present
dollars versus present value of a potential future
9. Jfwquitias and aggravating factors
10. Nature of the case that remains after settlement:
Thorough examination of recalcitrants and the strategy
for pursuing these parties (if the current settlement
is a partial settlement); should list names, financial
viability, strength of evidence, etc. in comprehensive
format, or attach written strategy or referral package
for recalcitrants; provide timelines for future
actions; include discussion of additional work not
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SAMPLE SUMMARY CHART
POTENTIALLY RESPONSIBLE PARTIES
DEUtNIMIS
SETTLEMENT TOTAL COSTS
SETTLEMENT TERMS
SITE COSTS
PAST COSTS
ESTIMATED FUTURE COSTS
TOTAL
PAST
COSTS
PAST
COSTS
•wwfloacn
%HEGOvfRED
.TOTAL
EXTRAMURAL
Bf&CED
REMHDV
OVERSIGHT
O&M
ESTIMATED
TOTAL SITE
COSTS
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FIELD DEFINITIONS FOR SAMPLE SUMMARY CHART
PRPS
No. Settler* - Total number of PRPs signing the agreement
No. Non-Settlers « Total number of PRPs who received notice letters
but did not sign the agreement
de minimis;
Eligible * Total number of PRPs meeting the §122(g)(1)(A) or
§122(g)(1)(B) requirements.
No. Settlers » Number of eligible de minimis parties settling as
de minimis parties. This number should not include de minimis
parties settling in the major party settlement.
No. Non-Settlers - Number of eligible de minimis parties that do
not settle as de minimis parties or enter into the major party
agreement.
SITE COSTS
PAST COSTS:
Total Past Costs - All government expenditures including
extramural, indirect costs, interest costs.
Past Costs Recovered - The total dollar amount recovered in the
settlement that is attributed to past costs.
Percent Recovered - The past costs recovered as a portion of total
past costs.
Total Extramural Costa Expended - Dollars expended in contracting,
e.g., TES, REM, IAGS, etc.
ESTIMATED FUTURE COSTS:
Remedy - Estimated value of the remedy.
Oversight •> Bsrtimated value of EPA oversight.
OAM - Estimated value of O&N.
ESTIMATED TOTAL SITE COSTS:
Estimated Total Site Costs - Past Costs * Estimated Future Costs
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TERMS
Mixed Funded Amount » Maximum amount to be preauthorized or the
percentage to be preauthorized.
Value of the Settlement » Past Costs Recovered + Value of work to
be performed (including RI/FS, RD/RA, O&M) + Oversight costs
reimbursed.
Settlement as Percentage of Total Costs = Value of
Settlement/Estimated Total Site Costs
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