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 ------- United States Envirc--:---: °rir*r :--r- ^^ ' Wii.- - •• _._ ,J_ 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 £ ------- 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. ------- OSWER Directive Number 9835.4 -2- 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. ------- OSWER Directive Number 9835.4 -3- 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. ------- OSWER Directive Number 9835.4 -4- 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 ------- 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 ------- OSWER Directive Number 9835.4 -6- 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 ------- OSWER Directive Number 9835.4 -7- 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. ------- OSWER Directive Number 9835.4 -8- 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. ------- OSWER Directive Number 9835.4 -9- 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 ------- OSWER Directive Number 9835 .4 -10- 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 ------- OSWER Directive Number 9835.4 -1 1- 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 ------- |