United State* Office of
Environmental Protection Solid Waste and
Agency Emergency Response
DIRECTIVE NUMBER: 9835.4
TITLE: Interim Guidance: Streamlining the
Settlement Decision Process
APPROVAL DATE: Feb 12, 1987
EFFECTIVE DATE: Feb 12, 1987
ORIGINATING OFFICE: ~O $ H
S FINAL
*
D DRAFT
LEVEL OF DRAFT
Q A — Signed by AA or DAA
D B — Signed by Office Director
C C — Review & Comment
REFERENCE (other documents):
OS WER OS WER OS WER
VE DIRECTIVE DIRECTIVE Dl
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United States Envirc--:---: °rir*r :--r-
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OEPA OSWER Directive Initiation Reauest
2. Originator Information
Name of Contact Person Mail Cad* Office
Shron Foote WH-527 OWPE
1. Directive Number
9835.4
Telephone Number
382-4482
3. Till*
Interim Guidance: Streamlining the Settlement Decision Process
4. Summary oi Directive {Include brill stttamant of purpose/
Guidance to streamline and improve the CERCLA- settlement decision
process. This guidance addresses 3 areas of settlement process:
1) negotiation preparation; 2)management review; 3) criteria for
terminiatihg or continuing negotiations.
5. Keyword*
Streamline set-f-lprnpn-t-s . npagtiation oreparation . manaaement review
6a. Oo«s this Directive Supersede Previous Directives)? [J Yes ]jj No What directive (numbv. title)
b. Does It Supplement Previous Directive^)? Q Yes Q No What Directive (numttr. titlt)
7..DraftLav«l
LJ A — Signed by AA/DAA U 8 — Signed by Office Director C C — For Review & Comment LJ In Development
This Request Meets OSWER Directives System format
8. Signature of Lead Office Directives Coordinator .
^U^^L^L X. -$rtrir£
9. Name and Title of Approving Official
Date
^l^-i/e^
Data
OS WER OS \NER OS WER
DIRECTIVE DIRECTIVE £
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
FHB I2G87
OSWER Directive Number 9835.4
MEMORANDUM
SUBJECT;
FROM:
Interim Guidance: Streamlining
Settlement Decision Process
the CERCLA
J. Winsto
Assistant
Office of
Porter
Administrator
Solid Waste
Thomas L. Adams, Jr.
Assistant Administrator $b
and Compliance Monitorii
Emergency Response
Enforcement
TO:
Regional Administrators, Regions I-X
Waste Management Division Directors, Regions I-X
Regional Counsels, Regions I-X
During the Administrator's Superfund Implementation Meeting
of November 19-20, 1986, several concepts were presented for
streamlining and improving the CERCLA settlement decision process
Those concepts addressed three major areas:
1. Negotiation Preparation;
2. Management Review of Settlement Decisions; and
3. Deadline Management.
The purpose of this memorandum is to set forth those concepts in
greater detail and to define the roles, responsibilities and
procedures necessary to implement this important initiative.
BACKGROUND
BACKGROUND
Under CERCLA, EPA's goal has been and will continue to be to
maximize the number of sites which can be cleaned up. Congress
clearly indicated their support for this goal in the Section 122
settlement procedures of the Superfund Amendments and
Reautnorization Act of 1986 (SARA). That goal requires constant
review of old policies and development of new measures which
promote privately financed response actions.
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OSWER Directive Number 9835.4
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Clearly, one important measure to encourage settlement is to
maintain aggressive use of Section 106 administrative and judicial
enforcement authorities to compel private party response (see
Porter/Mays memorandum "Use of CERCLA §106 Judicial Authority-Short
Term Strategy", dated July 8, 1986). The Office of Solid Waste
and Emergency Response (OSWER) has recently amended aspects of
the Superfund Comprehensive Accomplishments Plan (SCAP) to offset
some of the attendant project delay due to CEPCLA Section 106
litigation. Regions may now request funding for remedial design
(RD) for enforcement lead sites concurrent with their referral.
This approach not only minimizes the time where no site action
proceeds, but also puts the government in a stronger position at
trial. Regions would be expected to pursue the litigation to
completion absent extraordinary circumstances or compelling
public health concerns.
Congress recognized the value of enhancing the settlement
process in enacting SARA. The provisions for Section 122 are
based in large part upon EPA's Interim CERCLA Settlement Policy
(50 FR 5034) and are designed to increase potentially responsible
party (PRP) participation in response actions. The new provisions
related to special notice, information sharing and negotiation
moratoria are particularly important. They attempt to strike a
balance between the competing demands of prompting more settlements,
conserving limited government resources, and minimizing the delay
in the clean-up process.
Additionally, our experience in the last six years has
shown us that the way in which we manage other parts of the
settlement process can also have dramatic effects on the chances
for successful negotiations. For example, setting deadlines too
tightly can destroy the willingness of PRPs to attempt to settle.
On the other hand, prolonged and inconclusive negotiations can
seriously delay response actions at a site. Based on our
experience, and comments from the Regions -and other parties
involved in the process, the Agency has concluded that there are
three areas, in addition to the matters covered by SARA, where
certain changes will help improve and streamline our process for
conducting settlement discussions:
0 Negotiation Preparation;
0 Management Review of Settlement Decisions; and
0 Deadline Management.
Before describing these changes in the sections which follow,
a brief description of the problems that have been encountered
will,help to explain why this guidance has been prepared.
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OSWER Directive Number 9835.4
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There are two kinds of problems sometimes associated with
negotiation preparation; instances where EPA does not fully
prepare itself for negotiations and instances where EPA does not
facilitate the preparation of PRPs. Negotiations are occasionally
begun without the benefit of government proposed settlement
documents (e.g., a draft consent decree and technical support
documents). Ideally, negotiating teams should have a strategy
for settlement which addresses goals, interim milestones for
continuing negotiations, firm schedules and followup steps in the
event settlement is not achieved. When EPA does not adequately
plan, it is difficult for the government to live up to its
responsibilities in moving discussions towards conclusion.
Perhaps more important, though, are the issues related to
our support of the PRP preparation process. PRPs at Superfund
sites are often facing multi-million dollar liability. There are
generally many of them (sometimes hundreds) and our success in
negotiations is greatly influenced by the extent to which the
PRPs have the time and information to organize themselves. Our
occasional failure to give early notice or to provide adequate
information (including draft settlement documents) to PRPs has
been clearly counterproductive. Conversely, in those instances
where notice has been given early in the process, substantial
information has been made available and where EPA has assisted
in the formation of steering committees (with or without third
party assistance), we have been much more successful in settlement
efforts.
Prompt conclusion of some negotiations has also been
occasionally hampered by breakdowns in EPA's management review
of settlement decisions. Superfund settlements have frequently
posed issues which are difficult either because of their prece-
dential nature or the sheer magnitude of the clean-up. Delayed
decisions often affect the willingness of PRPs to settle and
always impair the credibility of the negotiating team. When
delays have occurred, they are generally attributable to several
factors. In some instances, negotiating teams did not raise
issues to management early in the process, and decisions ultimately
are forced by crisis. In other cases, decisions seemingly can
be made only by the highest levels of Headquarters management.
The relative inaccessability of those decision-makers to decide
on critical issues in a timely way has sometimes been a major
impediment to settlement.
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OSWER Directive Number 9835.4
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The third problem area in the settlement process relates to
managing deadlines for negotiations. In recognition of the fact
that these are multi-party negotiations over complicated legal
and technical issues, a reasonable opportunity should be provided.
However, guidelines must be established for bringing closure to
issues so as not to excessively delay the clean-up at the site.
At times, decisions are made to extend negotiations based on a
showing of some subjective "progress", even where there is no
concrete result to show for that progress. Decisions are sometimes
made to continue negotiations based on concerns over future cost
recovery actions.
In order to substantially improve the CERCLA settlement
process, attention must be given to solutions for each of the
three areas discussed above. The framework set forth herein is
intended as a major first step in that direction. However,
refinement and modification of these steps will be considered
based on your comments and experience gained in the coming months.
SETTLEMENT PROCESS IMPROVEMENTS
Negotiation Preparation
Regions should improve negotiation preparation through four
activities:
1. Earlier, Better Responsible Party Searches
2. Earlier Notice and Information Exchange
3. Initiating Discussions Earlier
4. Preparation of a Strategy and Draft Settlement Documents.
The PRP Search is the first step in the settlement process
and is one of the most critical to success. Regions must pay
close attention to both the timing and quality of the PRP search
since inadequate information on the identity of PRPs and their
contributions can be a significant impediment to the PRPs
organizing themselves to present an offer of settlement. Guidance
and targets established under the SCAP now require that PRP
searches be initiated concurrent with the Expanded Site
Investigation or National Priorities List (NPL) scoring quality
assurance process. PRP searches are required to be completed
not later than the year in which the site is proposed for the
NPL. Contractor efforts should be supplemented by issuance of
information request letters or the use of administrative subpoenas
(a new provision of SARA) at the earliest possible time. It is
imperative that these searches be comprehensive and of high
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OSWER Directive Number 9835.4
quality. That places a heavy responsibility on Regional staff
to provide direccion to and review of contractor efforts. In-
house civil investigators will be hired and available to Regions
this year to assist in this effort. In addition, Headquarters
staff from both OSWER and the Office of Enforcement and Compliance
Monitoring (OECM) will revise the the "Potentially Responsible
Party Search Manual" as well as present a training program
.for Regional staff and contractors on the conduct and review of
PRP searches. That training should be initiated late this year.
In the meantime, Regional staff should carefully evaluate the
adequacy of PRP searches for sites scheduled for fund obligations
or judicial referral during FY 87 and early FY 88 to determine
whether supplemental work is necessary.
Regions should give notice to PRPs of their potential
liability through the traditional notice letters at the earliest
practicable time and, in all cases, well in advance of initiating
the negotiation moratorium. This is not to be confused with the
Special Notice which triggers the moratorium as described in
§122(e). (Guidance on Special Notice and the moratorium is forth-
coming.) It is not acceptable to postpone issuing notice until
only the minimal time for negotiations remains prior to obligation
of funds. Notice may be given to some parties where further
investigation or analysis is necessary to identify additional
PRPs.
Notice letters should routinely include information requests
under Section 104{e) if not previously issued. Notice letters
should to the maximum extent practicable also provide information
as to other PRPs (i.e. names, volumes contributed and rankings).
In some cases, it may be more pratical to provide this information
after analyzing the responses to the information requests.
It is likewise important to initiate discussions with PRPs
earlier in the process. While formal negotiations may not begin
until after Special Notice and closer to the planned obligation
date for the project, EPA 'should encourage earlier discussions
that will further the process of educating the PRPs as to the
site, EPA's approach to it and the information we have that may
bear on allocation or other pertinent matters.
The litigation team must also begin early the process of
preparing draft settlement documents and a negotiation strategy.
A draft Consent Decree (or administrative order for Remedial
Investigation/Feasibility Study (RI/FS)) should be prepared
along with any negotiation support documents outlining technical
objectives to be presented at or before the first negotiation
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OSWER Directive Number 9835.4
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session. (Note that a "Negotiation Support Document" to be used
as a technical attachment for an RI/FS settlement may be prepared
by a contractor but must be initiated well in advance of
negotiations). Regional staff should also prepare for regional
management review a negotiation strategy which addresses:
0 initial positions on major issues with alternative and
bottomline positions or statements of settlement objectives;
0 schedule for negotiations which identifies not only the
drop-dead date but also interim milestones at which
negotiations can be evaluated for progress (date for good
faith proposal with line-by-line response to draft settle-
ment document; date for resolution of major issues related
to scope of work, funding arrangements, reimbursement;
date for receipt of all necessary submittals from PRPs
such as technical attachments, preauthorization requests,
trust agreements, etc);
0 strategy and schedule for action against PRPs in the
event negotiations are unsuccessful (i.e., issuance of
unilateral Administrative Order (AO) concurrent with
Remedial Design (RD) obligation, Section 106
referral, etc).
The timing of most of these activities is critical and in
many cases will be related to the proposed date of obligation of
funds. For that reason, management attention to the entire site
management planning process is critical to ensure that the required
activities at sites are properly sequenced. In order to assist
you in this, attached for your Region is an Enforcement Confidential
printout taken from the Integrated SCAP which shows the status
of key settlement related activities for sites with planned
obligations during FY 87 or FY 88. (Attachment I)
Management Review of Settlement Decisions
To help improve the management review of settlements, this
section sets out roles and accountability in the decision process.
In addition, it adds two new elements to focus and streamline
policy review:
0 A Settlement Decision Committee (SDC); and the
0 Assistant Administrator (AA) Level Review Team.
The existing negotiation team approach will continue to be the
primary vehicle for developing settlements. The negotiation team
will routinely be comprised of a representative from the Waste
Management Division and a representative from the Office of Regional
Counsel. Department of-Justice (DOJ), OECM, the Office of Waste
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OSWER Directive Number 9835.4
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Programs Enforcement (OWPE) staff and appropriate State representa-
tives may participate as necessary. The responsibilities of the
negotiation team are to:
0 ensure that PRP searches, notice and information exchange
are properly scheduled and completed;
0 develop a comprehensive negotiations strategy in advance
of negotiations;
0 develop and share draft settlement documents, including
technical scopes of work, in advance of negotiations;
0 conduct negotiations; and
0 raise issues to the Regional Administrator, and where
necessary, to the Settlement Decision Committee for
resolution.
The Regional Administrator, in consultation with DOJ, is
expected to be the primary decision-maker on CERCLA settlement
issues. Administrative settlements for RI/FS are fully the
Regional Administrator's responsibility. OSWFR and OECM con-
currence continues to be required on remedial settlements. In
particular, certain major or precedential issues in Remedial
Design/Remedial Action (RD/RA) negotiations should be referred
for early Headauarters resolution. Those issues include mixed
funding or preauthorization arrangements, broad releases,
de m i n i mi s settlements, deferred payment schemes, and remedies
that deviate significantly from the Record of Decision (ROD).
More detailed guidance on those issues will be prepared and made
available to you in the coming months.
At the same time such guidance is being prepared, Headauarters
will develop an oversight program that ensures quality and con-
sistency in Regional program administration, and provides sufficient
feedback to allow future policy adjustments. Once guidance is
finalized, some experience has been gained, and the oversight
program is in place, we fully expect that the Regional Administrator
will have broad authority to reach settlement decisions within the
framework of that guidance. In the meantime, initial delegations
of certain new authorities will be limited by consultation or
concurrence reauirements. After a period of experience, waivers
of concurrence may be made to those Regions which demonstrate
continuous quality and consistency in administering the CERCLA
enforcement process. At this point, which is likely to occur
within approximately one year, OSWER and OECM will largely fill an
oversight role, assuring effective settlements consistent with
applicable guidance and developing additional guidance as necessary.
That role will also include periodically reviewing whether waivers
of concurrence remain justified.
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OSWER Directive Number 9835.4
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In the interim, a Settlement Decision Committee (SDC) has been
created in Headquarters to provide timely action on issues which
require Headquarters review. The SDC will be made up of the
following individuals:
Chair: Gene A. Lucero, Director, OWPE
Members: Edward E. Reich, Associate Enforcement Counsel for Waste,
OECM
David T. Buente, Chief, Environmental Enforcement Section,
DOJ
Basil G. Constantelos, Director, Waste Management Division,
Region V
Bruce Diamond, Regional Counsel, Region III
Henry L. Longest, Director, Office of Emergency and
Remedial Response (OERR) (when necessary)
Regional representatives to the SDC will be rotated every six
months. The SDC will meet approximately every 3-4 weeks, or more
often if necessary. Its primary responsibility will be to coordin-
ate decisions on policy issues raised by Regions. Most settlement
issues requiring Headquarters review will be resolved at this
level. The Chief, Compliance Branch, CERCLA Enforcement Division
(CED), OWPE will serve as secretary for the SDC and will coordinate
communicating policy decisions to the affected Region, and more
broadly where decisions create precedent which may be transferable
to other sites. The SDC will also monitor Regions' progress towards
finalizing settlements, paying particulary close attention to
pending deadlines.
Regions should access the SDC through either OECM-Waste or
the CERCLA Enforcement Division, OWPE. Regions should be prepared
to provide a brief summary of the issue, options and their
recommendation. Regions may, at their discretion, attend the SDC
meeting to present or elaborate on the issue. (More detailed
procedures will be established by the SDC.)
The Assistant Administrator Review Team which was established
during April 1986, will become a formal part of the management
review and decision-making process. The group will be chaired by
the AA-OSWER and include the AA-OECM and the Assistant Attorney
General for Lands and Natural Resources, DOJ. The primary function
of this Team will be to provide overall policy direction on
settlement concepts, but will also be available to resolve major
policy issues specific to sites where necessary, as determined by
the SDC. The AA Review Team will meet at least quarterly, but
may convene more frequently, if required by circumstances. As
Chair of the AA Review Team, the AA-OSWER must approve extensions
of negotiations beyond .the 30 day authority granted to Regional
Administrators below.
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OSWER Directive Number 9835.4
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Deadline Management
Effective management of negotiations in the CERCLA program
will require increase management attention both in Regions and
Headquarters. In order to facilitate the management overview
that will be necessary, particularly within both the program and
counsel's office in the Region, OSWER will provide to you periodic
reports from the Integrated SCAP, similar to Attachment I, which
highlight negotiations in progress or planned for the next quarter.
Headquarters staff and management will use these reports to track
the progress of and preparation for negotiations.
Recognizing the complexity of CERCLA settlement discussions,
it is clear that there will be instances where extension of
discussion beyond the moratorium period will be appropriate. The
framework for considering extensions includes:
1. Thirty day Extension by the Regional Administrators
2. Additional Extension by AA-OSWER in Exceptional
Circumstances
While the SARA Section 122 provisions related to special
notice and negotiation moratoria are discretionary, EPA policy
will be that those provisions should generally be employed.
Section 122 provides for up to a 120 day moratorium before remedial
action, during which time EPA may not initiate enforcement action
or remedial action. The full moratorium period is conditioned on
receiving a good faith offer from the PRPs within 60 days. In its
absence, the moratorium expires after 60 days. (Note that while
EPA may proceed with design work, as a general rule we will not.)
Where adequate preparation as discussed above has preceded special
notice, Regions should generally be able to conclude negotiations,
or at a minimum, resolve all major issues during that period.
While negotiation extensions should not be encouraged, Regional
Administrators may grant extensions to negotiations when it is
believed that a settlement is likely and imminent. However, this
period should not to exceed 30 days.
Further extension of negotiations beyond that 30 day period
may be approved only by the AA-OSWER. Absent that approval,
Regions are expected to move forward with Fund-financed action,
administrative order or judicial referral where appropriate.
(Note that negotiations may be resumed at any point after referral
and filing of a Section 106 action.) Extensions will be granted
only -in rare and extraordinary circumstances and will generally
be for short duration where the expectation is that final agreement
is imminent. Requests for extension should be made by the Regional
Administrator in writing through the Director, OWPE to the AA-OSWER
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OSWER Directive Number 9835 .4
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and should set out succinctly: 1) the length of extension re-
quested; 2) status of negotiations (issues resolved and those
unresolved); 3) justification for extension; and 4) actions to be
taken in the event that negotiations are unsuccessful. The AA-OSWER
will only consider requests for extensions made by the Regional
Administrator and not direct requests made by PRPs.
In order to avoid any misunderstanding, these limitations
should be communicated to the PRPs early in any discussions.
Moreover, the schedule for negotiations, so long as it respects
these deadlines, is. always open to adjustment by agreement among
the parties.
As discussed earlier, it is important to recognize that
negotiations are not limited to the 120 day period established by
the special notice provisions of the law. Information requests
and traditional notice letters should be sent as soon as possible,
and initial discussions should almost always occur with PRPs before
the special notice is provided. We are developing more detailed
guidance on notice letters, and the use of the special notice
procedures, and we anticipate circulating this guidance for
comment within the next month.
One of the lessons learned as a result of the limited April-
May 1986 funding during the Superfund slowdown was that there are
benefits derived by having several settlements which are on a
parallel and firm schedule for final resolution. Not only did we
find that firm schedules tend to force issues to resolution, but
it proved to facilitate management review in that sites with
similar issues could be dealt with concurrently. In order to
extend this "clustering" effect, OSWER is considering including
in the FY 88 Strategic Planning and Management System (SPMS)
commitments a target for completion of RD/RA negotiations.
Approach for RI/FS Negotiations
In light of the delegation of RI/FS decisions, much of the
above process is not relevant for RI/FS negotiations. The Agency
continues to encourage PRP conduct of RI/FS in appropriate
circumstances (see Thomas/ Price memorandum "Participation of
Potentially Responsible Parties in Development of Remedial
Investigation and Feasibility Studies", dated March 21, 1984).
RI/FS settlement issues should generally be resolved by the Regional
Administrator and need not be submitted to the SDC or the AA-level
review group. Section 122 authorizes a 90 day moratorium for
negotiations, conditioned on receiving a good faith offer from
PRPs within 60 days of special notice. Regional Administrators
have discretion to terminate or extend negotiations after 90 days.
However, extension of negotiations beyond an additional 30 days
should be authorized by the Regional Administrator only in
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OSWER Directive Number 9835.4
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limited cases. The points made above in Negotiation Preparation
are equally applicable to RI/FS negotiations, with the exception
that negotiation strategies do not require Headquarters review.
SUMMARY
Implementation of these steps to streamline the settlement
process was identified by the Administrator as one of his highest
priorities under SARA. We urge you to give this topic the same
priority in your Regions and provide a commensurate level of
management attention.
If you have any questions about these measures or their
implementation, please contact either of us directly.
Attachment
cc: Superfund Branch Chiefs
Regional Counsel RCRA/CERCLA Branch Chiefs
Enforcement Section Chiefs
Gene A. Lucero
Henry Longest
Ed Reich
Jack Stanton
Russ Wyer
David Buente
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