UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OSWER // 9832.18
MAR 2 I 1991
OFFICE OF
SOLID WASTE AND EMERGENCY RESPONSE
MEMORANDUM
SUBJECT:
FROM:
TO:
Written Demand for Recovery of Costs Incurred Under the
Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA)
Bruce Diamond, Director
Office of Waste Program
William A. White
Acting Associate Enforcem
for Superfund
Regional Administrators, Regions I - X
To maximize cost recovery under the Comprehensive
Environmental Response, Compensation, and L-iability Act (CERCLA) ,
Regions are responsible for documenting costs, issuing written
demands1 for those costs, and pursuing parties that do not
reimburse the Environmental Protection Agency (EPA).
1/ The term "written demand" is used throughout this document
in reference to CERCLA § 107(a). A "demand letter" is the form of
written demand which is issued where response costs have been
incurred under CERCLA but are not contained in a special notice
letter. Thus, demand letters as referenced in the "Superfund Cost
Recovery Strategy" (July 29, 1988, OSWER Directive No. 9832.13),
or any other CERCLA policy or guidance, are considered a type of
written demand. Although EPA is not required by CERCLA to issue
written demands to accrue interest, use of these written demands,
in accordance with this guidance, will help maximize interest
recovery. See U.S. v. Bell Petroleum Services. Inc.. MO-88-CA-05
(W.D. Texas March 8, 1990) where prior written demand was held not
to be strictly required for recovery of prejudgment interest. The
court stated that the language in CERCLA 107(a) regarding written
demands essentially is a guideline for courts to follow for
determining the date from which prejudgment interest begins to
accrue.
Printed on Recycled Paper
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OSWER # 9832.18
The primary purposes of written demands are: (1) to formalize
the demand for payment of incurred costs plus future expenditures,
(2) to infora potential defendants of the dollar amount of those
costs, and (3) to establish that interest begins to accrue on
expenditures. This guidance is intended to help assure that
written demand is made early to maximize recovery of interest,
without creating an unduly burdensome process.
This guidance updates those portions of the directive "Cost
Recovery Actions under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA) " (August 26, 1983,
OSWER Directive No. 9832.1), which address use and issuance of
written demand. Additional information about cost recovery
activities may be found in the documents listed in Appendix C,
Index of Existing Relevant Guidances.
Attachment
cc: Directors, Waste Management Division,
Regions I, IV, V, and VII
Directors, Hazardous Waste Management Division,
Regions III, VI, VIII, and IX
Director, Emergency and Remedial Response Division,
Region II
Director, Hazardous Waste Division,
Region X
Regional Counsel, Regions I-X
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OSWER / 9832.18
Written Demand for Recovery of Costs Incurred
Under the Comprehensive Environmental Response
.Compensation and Liability Act (CERCLA)
I. Authority to Incur Interest
II. Types of Written Demand
A. Special Notice Letters Containing Demand for Payment
B. Demand Letters
1. Following Removal or Remedial Activities
2. Oversight Reimbursement
3. Partial Settlement
4. Prior to Referral to DOJ
III. Content of Written Demand
IV. Roles and Responsibilities of Regions
A. Pre-Demand Activities
B. Documentation/Interest Calculation
1. Documentation
2. Interest
C. Preparing and Issuing the Demand
D. Use of Recipient List
E. States and State-lead Sites
F. Payment
G. Negotiation and Settlement
H. Procedure in Event of No Response or No Settlement
V. Disclaimer and Further Information
Appendix A Model Demand Letters
Appendix B Sample Summary of Costs
Appendix C Index of Existing Relevant Guidance
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OSWER t 9832.18
I. AUTHORITY TO INCUR INTEREST
CERCLA § 107(a) provides, among other things, that specified
classes of responsible parties are liable for all costs incurred
by the United States government in response to a release or threat
of release of hazardous substances. In addition, PRPs are liable
for damages for injury to, destruction of or loss of natural
resources, including the costs of assessing such injury, loss, or
destruction, and for costs of any health assessment or health
effects study carried out under CERCLA § 104(i).
The Superfund Amendments and Reauthorization Act of 1986
(SARA) extends responsible party liability under CERCLA to include
interest on recoverable costs. CERCLA § 107(a) states:
[t]he amounts recoverable in an action under this section
shall include interest on the amounts recoverable... . Such
interest shall accrue from the later of (i) the date payment
of a specified amount is demanded in writing, or (ii) the date
of the expenditure concerned. The rate of interest on the
outstanding unpaid balance of the amounts recoverable under
this section shall be the same rate as is specified for
interest on investments of the Hazardous Substance Superfund
established under subchapter A of chapter 98, of Title 26 [of
the Internal Revenue Code of 1954, as modified in 1986].
EPA3 intends to use this authority and demand interest on all costs
as appropriate.
II. TYPES OF WRITTEN DEMAND
A. Special Notice Letter Containing Demand for Payment
Special notice letters should contain written demand for
reimbursement of past and future costs. For example, if a special
notice letter includes a demand for payment, interest may begin to
2/ For pre-SARA expenditures, various courts have held that
EPA may collect preju--.fment interest on recoverable costs. U.S.
v. Northernaire Platin? Co. 685 F. Supp. 1410 (W.D. Mich. 1988),
aff d. 889 F.2d 1497 (6th Cir. 1989); U.S. v. Northeastern
Pharmaceutical & Chemical Co. . 579 F. Supp. 823 (W.D. Mo. 1984),
aff'd in part, rev'd in part, and remanded. 810 F.2d 726 (8th Cir.
1986), cert, denied. 108 S. Ct. 146 (1987).
3/ This document refers to "EPA" rather than "lead-agency."
As discussed in part IV E of this guidance, EPA is responsible for
issuing a written demand in situations where a state has the lead
for enforcement actions.
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OSWER # 9832.18
accrue from the date of the special notice letter for those costs
already expended. The special notice is not the only or first time
EPA may issue a demand for costs incurred. Therefore, interest may
begin accruing at an earlier date than the issuance of the Special
notice with demand. Interest begins to accrue for subsequent
expenditures upon the date of expenditure.4 Once written demand
has been sent with the special notice letter, record of demand
should be entered into CERCLIS and Regional tracking systems as an
issued demand. If a reasonable estimate of past costs cannot be
developed prior to issuance of the special notice letter, that
information may be provided at a later point.5
General notice letters, also, may contain written demand for
reimbursement of past and future costs if sufficient evidence of
PRP liability is available at the time of issuance and past costs
are known.
B. Demand Letters
Demand letters should be issued:
o following completion of individual response actions.
If response actions are taken at operable units,
demand letters should be issued following completion
of actions at each unit,
o for oversight costs,
V However, see the discussion in footnote 1 concerning U.S.
v. Bell Petroleum Products. Inc.
5/ As stated in the October 19, 1987, "Interim Guidance on
Notice Letters, Negotiations, and Information Exchange" (OSWER
Directive number 9834.10):
The [special notice] letter should include a demand that PRPs
reimburse EPA for the costs the Agency has incurred in
conducting response activities at the site pursuant to
§107(a). The letter should identify the action EPA undertook
and the cost of conducting the action. The letter should also
indicate that the Agency anticipates expending additional
funds on activities covered by this notice and other specified
future activities. Finally, the letter should demand payment
of interest for past and future response costs incurred by EPA
pursuant to §107(a).
The model notice letters in OSWER directive number 9834.10 contain
a sample paragraph for demand in special notice letters, which is
included in Appendix A of this guidance.
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OSWER # 9832.18
o to non-settlers when less than 100% of EPA's costs
are, or will be, obtained under a settlement, and
o prior to referral to the Department of Justice
(DOJ)„
Depending on how a PRP responds to a demand letter, including
whether it settles and how it complies with settlement terms, a PRP
may receive more than one demand letter for the same costs.
To promote cost recovery and maximize recovery of interest,
EPA will transmit written demand as early as practicable following
expenditures associated with a response action. The letter should
also indicate that the Agency anticipates that additional funds may
be expended on activities covered by this notice and other
specified future actions.
1. Following Removal or Remedial Activities; Demand letters
should be issued after:
o completion of a removal action,
o completion of a Remedial Investigation/Feasibility Study
(RI/FS) (i.e., at issuance of a ROD) for a site or, if
applicable, an individual operable unit, and
o an award of a contract for a Remedial Action (RA) for a
site or, if applicable, an individual operable unit.
(The demand should include Remedial Design (RD) costs and
estimated RA costs).
To expedite cost recovery, demand letters should be issued as
soon as possible following an appropriate response action, but
generally no later than twelve months after completion of each
distinct phase of a response action. For example, for a non-CERCLA
104(b) removal, when removal activities are done; for a funded
RI/FS, at the time the Region issues a § 122(a) letter related to
RD/RA negotiations. (If the Region does not issue a S 122 (a)
letter, but issues a special notice letter, the special notice
should contain a demand for RI/FS costs and a separate demand
letter is not necessary.) In accordance with the "Superfund Cost
Recovery Strategy" (OSWER Directive No. 9832.13), written demand
for RD and RA should be made no later than the initiation of
physical on-site construction of the remedial action.
Regions should periodically review disbursements of costs and
estimates of future costs and issue a subsequent demand for payment
of costs to PRPs when these costs or estimates have significantly
accumulated or increased. Demand letters should always reflect
EPA's most current costs. An updated accounting of costs in a
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OSWER f 9832.18 .
demand letter will help avoid possible delays in negotiations by
minimizing lag time while PRPs negotiate allocation issues among
themselves.
2. Oversight Reimbursement; EPA seeks reimbursement of
oversight costs pursuant to either administrative consent orders,
judicial consent decrees, or demand letters issued independently
of a consent order or decree (for example, for oversight of a
unilateral administrative order). Typical administrative consent
orders provide that EPA will seek reimbursement from PRPs by a bill
or accounting, rather than a "demand letter," at the end of each
one-year period throughout the period of the order for all
oversight costs incurred during that year.
Where there is a settlement embodied in a consent order or
decree, bills should specifically reference the provision in the
order or decree which provides for oversight reimbursement, and the
section which specifies the schedule for reimbursement. Bills for
reimbursement of negotiated oversight costs should include a
statement that:
"[t]he cost of EPA's oversight of the PRP's cleanup for
the period of rinsert time period] at the [insert name]
facility, including related administrative expenses, is
$ . In accordance with rinsert consent decree or
administrative order on consent provision number! demand
is hereby made upon [insert name] for payment of the
above stated sum."
If PRPs are operating under an administrative order or
judicial decree which does not include a provision for oversight
reimbursement, a demand letter should normally be issued which
demands reimbursement for costs related to oversight. An oversight
reimbursement demand is covered by the reservation of rights clause
in an order or decree.
Demand letters for oversight reimbursement, where the work
was performed outside the framework of a settlement for such costs,
should include a statement that:
"[t]he cost of EPA's oversight of the PRP's cleanup for
the period of [insert time period] at the [insert name]
facility, including related administrative expenses, is
$ . In accordance with CERCLA S 107, demand is
hereby made upon [insert name) for payment of the above
stated sum."
Oversight costs should be accurately recorded as an oversight
activity in CERCLIS to ensure proper tracking and follow-up of this
cost recovery category.
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OSWER # 9832.18
3. Partial Settlement; If a settlement has been reached with
fewer than 100% of the PRPs for only a portion of costs incurred
by EPA, a demand letter may be issued to the remaining non-settling
responsible parties, if sufficient liability evidence is available
to the Region. This may be followed by appropriate enforcement
action seeking recovery of remaining costs. The demand letter
should request reimbursement of the total cost of remediation,
oversight, and operation and maintenance, less the amount settled,
plus interest. If appropriate, the demand letter should indicate
that a portion of the response and/or costs have already been
settled and note the settled amount. For purposes of negotiations
and subsequent litigation with non-settling PRPs, when pursued, the
Region may wish to attribute specific costs to the appropriate
operable unit. If there are no remaining PRPs, the remaining PRPs
are not financially viable, or the evidence of their liability is
too weak, the Region should close-out costs in accordance with
OSWER Directive No. 9832.11.
4. Prior to Referral to DOJ; Demand letters should be issued
to all defendants prior to referral of a cost recovery case to the
Department of Justice (DOJ). In limited instances, however, EPA
may choose to issue the demand letter concurrently with referring
the cost recovery case to DOJ. This latter approach may be taken,
for example, where the statute of limitations deadline is rapidly
approaching and when negotiations have broken off and it is
apparent to the Region that the PRP will not reimburse EPA after
follow-up contact has been attempted. Regions should take
particular care that demand letters issued prior to CERCLA §107
cost recovery referral should reflect EPA's most current costs.
III. CONTENT OF WRITTEN DEMAND
Many of the following items (except numbers 7-10) are included
in a special notice letter regardless of whether the letter
includes a written demand. However, when a special notice letter
includes a written demand, numbers 7-10 will need to be included
in the special notice letter. In addition to the items on the
following list, Regions may also choose to include S 104(e)
information request letters with the special notice and demand
letters. Model written demands are provided in Appendix A. At a
minimum, demand letters should include:
1. The name, location and spill identification number, if
appropriate, of the site.
2. Reference to EPA's authority to administer CERCLA and the fund
established under CERCLA (or reference to authority to recover
costs where the response activities for which reimbursement
is sought occurred prior to CERCLA).
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OSWER # 9832.18
3. Statement describing the release or threatened release of a
hazardous substance from a facility which causes the
incurrence of response costs.
4. A specification of the dates and types of response actions
undertaken by EPA at the site.
5. A statement that EPA believes that the recipient is a
responsible party as defined in CERCLA § 107(a) and liable for
the sum set forth in the demand letter.
6. Reference to any notice given to the recipient prior to or
during the response action which allowed the recipient an
opportunity to undertake the work or pay the expense of
response.
7. The total cost of the response action. When the Region
expects that future costs will be incurred, the demand letter
should clearly state that in addition to sums already
expended, EPA plans to expend additional sums on the site for
which the responsible party is liable. Costs previously
demanded, but not paid, should again be demanded. Previously
demanded, unpaid costs should also reflect appropriate
interest which has accrued. [This is also included in
special notice demand].
8. A demand for payment which includes the Superfund lock box
address. [This is also included in special notice demand.]
9. A statement that, pursuant to CERCLA § 107(a), "interest shall
accrue from the later of (i) the date payment of a specified
amount is demanded in writing, or (ii) the date of the actual
expenditure concerned. The rate of interest on the
outstanding unpaid balance of the amounts recoverable under
[CERCLA § 107] shall be the same rate as is specified for
interest on investments of the Hazardous Substance Superfund
established under subchapter A of chapter 98, Title 26 of the
Internal Revenue Code of 1954," [as modified in 1986]. The
demand letter should specify the current interest rate. Also,
the demand should note that EPA is not required by CERCLA to
issue a written demand for recovery of prejudgment interest.
The written demand serves as a guideline for determining the
date from which prejudgement interest begins to accrue. [This
is also included in special notice demand.]
10. A statement that specifies in the event the recipient files
for protection in the Bankruptcy Court, EPA reserves its right
to file a Proof of Claim or Application for Reimbursement of
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OSWER # 9832.18
Administrative Expenses against the bankrupt's estate. [This
is also included in special notice demand.]
11. A general statement giving the names of other PRPs to which
the written demand is sent. If a PRP steering committee has
been formed by previously identified PRPs, the steering
committee's contact should be provided. [This information
will already be in special notice letters but will be needed
in demand letters that follow special notice.]
12. A statement that the recipient of the demand letter should
contact EPA within a specified period (normally thirty days)
to discuss the recipient's liability.
13. The name, address, and telephone number of a representative
of EPA whom the recipient should contact.
14. A warning that if the recipient fails to contact EPA within
the specified time, a suit may be filed in the appropriate
U.S. District Court for recovery of the costs incurred.
15. For small administrative cost recovery actions, a draft of
EPA's proposed consent order for the cost recovery claim
should be enclosed with the demand for payment.
IV. ROLES AND RESPONSIBILITIES OF REGIONS
A. Pre-Demand Activities
When Regions are planning enforcement work at a site, full
consideration should be given to ensuring that activities
supporting the cost recovery action be incorporated in the
litigation strategy. This includes consideration of sufficiency
of resources, timing of written demands, compilation of
documentation and cost summaries on a periodic basis, etc. Regions
are expected to incorporate issuance of written demand into CERCLIS
or other case tracking systems a Region uses for cost recovery
purposes. For timing of issuance of demand, Regional Branch Chiefs
should track the sites for which they are responsible.
B. Documentation/Interest Calculation
1. Documentation; EPA Headquarters, the Region, DOJ, other
federal agencies, and states each have certain responsibilities in
organizing cost documentation information. Cost documentation
responsibilities have been delegated to the Regions such that
Regions now document all costs for sites in their respective areas.
The "Procedures for Documenting Costs for CERCLA S 107 Actions"
(January 30, 1985, OSWER Directive No. 9832.4) describes the roles
and responsibilities of each office in preparing cost documentation
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OSWER # 9832.18
for litigation (this guidance is being updated). Roles and
responsibilities for- developing demand letters are inter- and
intra-office and as such need to be coordinated.
For most demands, a current automated transaction report
(e.g., Software Package of Unique Reports (SPUR) or CDMS reports)
will adequately document direct costs, including pre-1986
contractor expenditures. CDMS reports may also calculate interest.
As discussed below, amounts in automated reports should be checked
for completeness and supplemented by indirect costs, interest, and
other Agency costs.
The following information should be available prior to
issuance of a demand:
o A current automated transaction report for the site,
o An indirect cost calculation, and
o An interest calculation (if not in the automated report) .
This information forms the basis of a good faith cost estimate that
can be used to begin settlement negotiations for costs. Accuracy
of the estimates should be verified before good faith negotiations
commence. The specified amount for written demand in special
notice letters may be based on a reasonable estimate at the
Region's discretion. Estimates may include the following items:
intramural costs, extramural costs, indirect cost calculation,
historic and annual cost allocations, oversight costs, and
interest. The Regional Financial Management Office may be of
assistance in answering questions about billing.
Demands based on automated transaction reports muct be made
with recognition that there may be delays in billings and payments
which therefore are not posted in the system, and that only
expenditures incurred through the last day of the preceding month
are included. In addition, costs incurred by other Agencies such
as DOJ and ATSDR (for health studies) are not included. To ensure
the accuracy of automated transaction reports, OSCs and RPMs should
review the automated transaction report data prior to issuance of
demand. For viable cases where the Region has reason to believe
that the report does not contain all data, the Region should locate
and review all cost recovery documents. Thus, care must be
exercised not to forego potential reimbursement by submitting
incomplete demands for payment. Demands are the Agency's best
6/ Viability of cases and factors for determination of
viability are discussed in the "Cost Recovery Strategy" (July 29,
1988 OSWER Directive number 9832.13).
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OSWER # 9832.18
approximation of costs incurred by EPA to date, and therefore,
should not be assumed to be the final statement of incurred costs
for reasons explained above.
If an Administrative Record7 file is available to the public,
the location of the file may be included in the demand. PRPs may
be interested in the specific breakout of costs that may be
available in the file. Quick and easy access to the file may help
expedite negotiations.
2. Interest; The interest rate is tied to 52-week U.S.
Treasury MK-Bills (MK-bills) that mature in early September of each
year. Like the securities from which the interest rate is derived,
interest will be compounded annually. On October 1 of each year,
outstanding receivables, which include interest accrued during the
previous fiscal year, will begin accruing interest at the new rate.
For additional information about interest rates and calculating
interest, see:
o "Interest Rates for Debts Recoverable Under the Super fund
Amendments and Reauthorization Act of 1986" (September
30, 1987, Comptroller Policy Announcement 87-17) or
o Comptroller Directive "Financial Management of the
Superfund Program" (July 25, 1988, Directive No. 2550.D);
or contact your Financial Management Office.
C. Preparing and Issuing the Demand
Roles and responsibilities for developing demand letters
involve full coordination among all Regional offices with
responsibilities for cost recovery, including the Waste Management
Division, Financial Management Office, and Office of Regional
Counsel. Regions may develop an internal written agreement to
assure implementation of roles and responsibilities for cost
recovery, including issuance of demands.
The demand should be sent certified mail, return receipt
requested. The return receipt should be included with a copy of
the demand in the site file.
7'/' The Administrative Record is the body of documents upon
which the Agency based its selection of a response action. For
additional information about administrative records, see the
"Guidance on Administrative Records for Selecting CERCLA Response
Actions," December 3, 1990, OSWER Directive No. 9833.3A-1.
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OSWER # 9832.18
D. Use of Recipient List
Written demand should be issued to all known, viable PRPs.
When the list of recipients of special notice letters as provided
in the "Interim Guidance on Notice Letters, Negotiations and
Information Exchange" (February 23, 1988, OSWER Directive No.
9834.10) is up-to-date, the special notice list may be used. When
not complete, it should be updated. At sites where special notice
letters are not sent, prior to referral to DOJ, separate demand
letters should be sent to PRPs. Before issuing a demand letter to
a PRP who has received only a general notice (without a demand),
the Region should determine whether it has sufficient evidence of
liability to make a demand.
E. States and State-lead Sites
EPA will be responsible for issuing written demand at state-
lead sites where Fund money was expended. Where EPA spends money
at a site, EPA will pursue cost recovery for that money. EPA
intends to coordinate all cost recovery action with states to avoid
split claims.
F. Payment
When payment is rendered in response to a written demand,
remittance should be made payable to the "EPA Hazardous Substance
Super fund" and sent to the Regional Superfund Lock Box, in
accordance with the EPA Office of the Comptroller Directive
"Financial Management of the Superfund Program" (July 25, 1988,
Directive No. 2550.D).
Inclusion in a formal legal document (e.g., an administrative
consent order issued by the Agency or a consent decree entered by
a court) of a requirement for payment of costs to EPA requires the
establishment of an "Accounts Receivable" in the Agency's
Integrated Financial Management System (IFMS), pursuant to Office
of the Comptroller Directive No. 2540, October 24, 1990. If,
however, a payment is received on demand, and no formal legal
document has been issued, an accounts receivable will be
established upon receipt of payment and entered as received.
G. Negotiation and Settlement
When a PRP responds to a written demand by expressing a desire
to negotiate EPA's claim, negotiations pursuant to CERCLA S 122(h)
may be appropriate and settlement discussions should be initiated
and carried out within a limited period of time. For negotiation
purposes only, Regions may wish to develop a breakout of costs
incurred (see Appendix B for an example). Additional information
on development of a negotiation team and redelegation issues may
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OSWER # 9832.18 .
be found on pages 22-25, 33-35, and 38-41, in "Superfund Cost
Recovery Strategy" (July 29, 1988, OSWER Directive No. 9832.13) and
pages 23=27 in "Cost Recovery Actions Under CERCLA" (August 26,
1983, OSWER Directive No. 9832.1).
H. Procedure in Event of No Response or No Settlement
When settlement negotiations fail, Regional management must
decide which sites to refer for judicial action under CERCLA S 107.
The "Superfund Cost Recovery Strategy" (July 29, 1988, OSWER
Directive No. 9832.13) lists the relevant factors to be considered
in determining whether to refer a case for cost recovery. If the
Region decides not to pursue a cost recovery action, the decision
must be documented in a cost recovery close-out memorandum.8
If no response is received to a demand letter, a follow-up
phone call or letter should be sent. If there is still no
response, a determination must be made whether the facts of the
case justify EPA's taking further steps to pursue the cost recovery
claim. As stated in the "Superfund Cost Recovery Strategy,"
Regions should generally anticipate developing cases for litigation
for all sites in which total costs of response exceeded two hundred
thousand dollars and negotiations for settlement were unsuccessful.
Sites in which total costs of response do not exceed two hundred
thousand dollars are also candidates for referral consistent with
the case selection criteria. The "Superfund Cost Recovery
Strategy" and the "Guidance on Documenting Decisions not to Take
Cost Recovery Actions" (June 7, 1988, OSWER Directive No. 9832.11)
further describe the case selection criteria.
When reimbursement of oversight costs is not made upon demand
or issuance of a bill (under a consent order or decree) , the
enforcement approach is dependent upon the underlying enforcement
document, if one exists. If a consent decree prc/ides for
reimbursement, a demand for stipulated penalties should be made in
accordance with the terms of the consent decree, and a motion
should be filed to enforce the decree. If work was performed
pursuant to a decree that did not provide for and did not release
defendants from oversight and other costs (past, for example), the
original action should be amended or a new action should be filed.
Stipulated penalties and, if necessary, a judicial referral should
be pursued in the case of non-payment for EPA costs, including
those for oversight activities, under an administrative order.
*/ "Guidance on Documenting Decisions not to Take Cost
Recovery Actions," (June 7, 1988, OSWER Directive number 9832.11).
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OSWER #9832.18
V. DISCLAIMER AND FURTHER INFORMATION
The policies and procedures established in this document are
intended solely for the guidance of employees of the U.S.
Environmental Protection Agency. They are not intended, and cannot
be relied upon, to create any rights, substantive or procedural,
enforceable by any party in litigation against the United States.
EPA reserves the right to act at variance with these policies and
procedures and to change them at any time without public notice.
For further information concerning this guidance, please
contact the Guidance and Evaluation Branch in the Office of Waste
Programs Enforcement at FTS (202) 475-6770.
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APPENDIX A
MODEL DEMAND LETTER
[Date]
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Addressee Name
Addressee Title and Corporation
Address
Address
Re: [Insert site name and mailing address]
Dear [Insert name]:
Pursuant to authority contained in § 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), 42 U.S.C. S 9604, [insert "in cooperation with" state
agency if appropriate] the United States Environmental Protection
Agency ("EPA") determined on [insert date/ if available] that there
was a release or substantial threat of a release of hazardous
substances (as defined by § 101(14) of CERCLA) from a facility known
as: [insert facility name and address] ("facility").
Beginning on [insert date], EPA undertook response actions pursuant
to § 104 of CERCLA, 42 U.S.C. § 9604. The response actions taken
include the following: [Insert brief description including dates of
activities as lettered items below.]
a.
b.
[If notice has not been previously provided/ insert the following
two paragraphs.] Under § 107(a) of CERCLA, 42 U.S.C. S 9607(a),
responsible parties may be held liable for all costs incurred by the
Government (including interest) in responding to any release or
threatened release of hazardous substances at the facility. Such
costs may include, but are not limited to, expenditures for
investigation, planning, response, enforcement activities, oversight
of response actions that are performed by parties other than EPA or
its contractors, and operation and maintenance of monitoring systems.
Responsible parties under CERCLA include current and former owners
or operators of the facility, persons who arranged for treatment
and/or disposal of any hazardous substances found at the facility, and
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OSWER t 9832.18
persons who accepted hazardous substances for transport and selected
the site or facility to which the hazardous substances were delivered.
EPA has evaluated evidence in connection with its investigation of the
[insert name] "facility and determined that you, as a [insert
addressee's relationship to the site], are a potentially responsible
party.
[If notice has been previously provided, insert all or part of the
following paragraph, consistent with the operative facts]. On [insert
date] EPA provided [insert either "oral notice followed by written
confirmation dated ; " or "written notice"] to you that
[insert name of addressee] is a party who may be liable for money
expended by EPA to take response action at the facility. At that
time, EPA also offered [insert name of addressee] and other
potentially responsible parties the opportunity to voluntarily take
the action necessary to abate any releases or threats of release of
hazardous substances from the facility or to reimburse EPA for actions
taken. Because you did not undertake the necessary actions, EPA
expended funds provided under the authority of CERCLA to clean up the
facility.
The cost to date of the response actions related to the site
through EPA funding is approximately $ [state direct and indirect
costs as specifically as possible]. This statement of expenditures
is preliminary, and does not limit EPA from providing a revised figure
if additional costs are identified.
[Note: In a judicial proceeding for cost recovery, the Agency will
be required to prove the actual amounts expended. If a previous
demand letter was issued, or if a request for payment was included in
the notice letter, costs previously demanded, but not paid, should
again be demanded. These costs should also reflect interest that has
accrued.]
In accordance with S 107(a) of CERCLA, demand is hereby made for
payment of the above amount plus any and all interest recoverable
under S 107 or any other provisions of law.
EPA anticipates that additional funds may be expended on the site.
Whether EPA funds the entire response action or simply incurs costs
by overseeing the parties conducting the response activities, you are
potentially liable for the expenditures plus interest.
Interest on past costs incurred shall accrue from the date of this
demand for payment or any earlier demand, whichever is earlier;
interest on future costs shall accrue from date of expenditure,
pursuant to CERCLA S 107(a), 42 U.S.C S 9607(a), interest rates are
variable. The rate applicable on any unpaid amounts for any fiscal
year is the same as is specified for interest on investments of the
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OSWER / 9832.18
Hazardous Substance Superfund which is determined by the Department
of the Treasury. The current annual rate of interest on unpaid costs
is [z.zx%].
EPA is not required by CERCLA to issue a written demand for
recovery of prejudgment interest. However, the date a written demand
is made may be used by a court in determining the date from which
prejudgment interest begins to accrue.
For your information, we have enclosed a list of persons who are
receiving a letter seeking reimbursement of the costs identified
herein. While your liability is joint and several, you and other
parties may allocate among yourselves the costs to be paid to EPA.
Remittance must be made payable to the "U.S. EPA Hazardous
Substance Superfund" established pursuant to CERCLA in Title 26,
Chapter 98 of the Internal Revenue Code, and must reference the
[insert name] facility. Please send your remittance to:
EPA - Region
Attn: Superfund Accounting
P.O. Box [insert Superfund Lock Box]
Pittsburgh, PA 15251
[Note: for Region 4 and 5 the mailing address is slightly
different.]
If you desire to discuss your liability9 with EPA, please contact
[insert name and title] in writing, not later than thirty (30)
calendar days after the date of this letter. [Insert name] may be
contacted at [insert phone number].
In the event that you file for protection in the Bankruptcy Court,
EPA reserves its right to file a proof of Claim or application for
Reimbursement of Administrative Expenses against the bankrupt's
estate.
If you fail to respond to this demand within thirty (30) calendar
days, EPA will conclude that you have declined to reimburse the
Hazardous Substance Superfund for site expenditures. Consequently,
EPA may pursue civil litigation against you, pursuant to CERCLA
§§ 106(a) and 107(a), 42 U.S.C. SS 9606(a) and 9607(a).
For small administrative cost recovery actions, a draft of
the proposed settlement document should be enclosed with the demand
for payment.
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OSWER f 9832.18
Sincerely,
[insert title]
United States Environmental Protection Agency
19
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OSWER t 9832.18
Attachment
List of Other Potentially Responsible Parties
1. Steering Committee Chairman
Name of the Committee
Corporation
Address
2. Name
Address
3. Name
Address
4. Name
Address
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OSWER # 9832.18
DEMAND PARAGRAPHS FOR INCLUSION IN SPECIAL NOTICE LETTERS FOR
REMEDIAL INVESTIGATION/FEASIBILITY STUDY (RI/FS) OR REMEDIAL
DESIGN/REMEDIAL ACTION (RD/RA).*
DEMAND FOR PAYMENT
With this letter, EPA demands that you reimburse EPA for its costs
incurred to date, and encourages you to voluntarily negotiate a
[consent order (not available for RD/RA)] [consent decree] in which
you and other PRPs agree to perform the [RI/FS] [RD/RA].
In accordance with CERCLA, EPA already has undertaken certain actions
and incurred certain costs in response to conditions at the site. The
cost to date of the response actions related to the site through EPA
funding is approximately $ [state direct and indirect costs to date
as specifically as possible]. In accordance with § 107(a) of CERCLA,
demand is hereby made for payment of the above-amount plus any and all
interest recoverable under § 107 or under any other provisions of law.
As indicated above, EPA anticipates expending additional funds for
the [RI/FS] [RD/RA]. Whether EPA funds the entire [RI/FS] [RD/RA],
or simply incurs costs by overseeing the parties conducting the
response activities, you are potentially liable for all expenditures
plus interest.
Interest on past costs incurred shall accrue from the date of this
demand for payment or any earlier demand, whatever is earlier;
interest on future costs shall accrue from date of expenditure,
pursuant to CERCLA § 107(a), 42 U.S.C § 9607(a). Interest rates are
variable. The rate applicable on any unpaid amounts for any fiscal
year is the same as is specified for interest on investments of the
Hazardous Substance Superfund which is determined by the Department
of the Treasury. The current annual rate of interest on unpaid costs
is [x.xx%].
EPA is not required by CERCLA to issue a written demand for recovery
of prejudgment interest. However, the date a written demand is made
may be used by a court in determining the date from which prejudgment
interest begins to accrue.
In the event that you file for protection in the Bankruptcy Court,
EPA reserves its right to file a Proof of Claim or Application for
Reimbursement of Administrative Expenses against the bankrupt's
estate.
Remittance must be made payable to the "U.S. EPA Hazardous Substance
Superfund" established pursuant to CERCLA in Title 26, Chapter 98 of
21
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OSWER # 9832.18
the Internal Revenue Code, and must reference the [insert name]
facility. Please send your remittance to:
EPA - Region
Attn: Superfund Accounting
P.O. Box [insert superfund Lock Box]
Pittsburgh, PA 15251
[Note: for Region 4 and 5 the mailing address is slightly
different.]
* Excerpted with modifications from "Interim Guidance on Notice
Letters, Negotiations, and Information Exchange," Appendix C (October
17, 1987, OSWER Directive No. 9834.10)
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OSWER # 9832.18
DEMAND PARAGRAPHS FOR INCLUSION IN NOTICE OF POTENTIAL LIABILITY
AND EPA CONDUCT OF REMOVAL ACTION.*
DEMAND FOR PAYMENT
In accordance with CERCLA, EPA already has undertaken certain actions
and incurred certain costs in response to conditions at the site.
These response actions include [describe response actions at the
site]. The cost to date of the response actions related to the site
through EPA funding is approximately $ [state direct and indirect
costs to date as specifically as possible]. In accordance with
§ 107 (a) of CERCLA, demand is hereby made for payment of the above
amount plus any and all interest recoverable under § 107 or under any
other provisions of law. You are potentially liable for additional
costs plus interest if EPA conducts additional activities at the site.
Interest on past costs incurred shall accrue from £he date of this
demand for payment or any earlier demand, whatever is earlier;
interest on future costs shall accrue from date of expenditure,
pursuant to CERCLA § 107(a), 42 U.S.C § 9607(a). Interest rates are
variable. The rate applicable on any unpaid amounts for any fiscal
year is the same as is specified for interest on investments of the
Hazardous Substance Superfund which is determined by the Department
of the Treasury. The current annual rate of interest on unpaid costs
is [x.xx%].
EPA is not required by CERCLA to issue a written demand for recovery
of prejudgment interest. However, the date a written demand is made
may be used by a court in determining the date from which prejudgment
interest begins to accrue.
In the event that you file for protection in the Bankruptcy Court,
EPA reserves its right to file a Proof of Claim or Application for
Reimbursement of Administrative Expenses against the bankrupt's
estate.
Remittance must be made payable to the "U.S. EPA Hazardous Substance
Superfund" established pursuant to CERCLA in Title 26, Chapter 98 of
the Internal Revenue Code, and must reference the [insert name]
facility. Please send your remittance to:
EPA - Region
Attn: Superfund Accounting
P.O. Box [insert Superfund Lock Box]
Pittsburgh, PA 15251
[Note: for Region 4 and 5 the nailing address is slightly
different.]
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OSWER # 9832.18
* Excerpted with modifications from "Interim Guidance on Notice
Letters, Negotiations, and Information Exchange," Appendix C (October
17, 1987, OSWER Directive No. 9834.10).
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OSWER # 9832.18
DEMAND PARAGRAPHS FOR INCLUSION IN NOTICE OF POTENTIAL LIABILITY
AND OFFER TO NEGOTIATE FOR REMOVAL ACTION OR NOTICE OF POTENTIAL
LIABILITY FOR REMOVAL AND USE OF SPECIAL NOTICE NEGOTIATION
PROCEDURES.*
DEMAND FOR PAYMENT
With this letter, EPA demands that you reimburse EPA for its costs
incurred to date, and encourages you to voluntarily negotiate a
consent order or decree in which you and other PRPs agree to perform
the response action.
In accordance with CERCLA, EPA already has undertaken certain actions
and incurred certain costs in response to conditions at the site.
These response actions include [describe response actions at the
site]. The cost to date of the response actions related to the site
through EPA funding is approximately $[state direct or indirect costs
to date as specifically as possible]. In accordance with § 107(a) of
CERCLA, demand is hereby made for payment of the above amount plus any
and all interest recoverable under § 107 or under any other provisions
of law. You are potentially liable for additional costs plus interest
if EPA conducts additional activities at the site.
Interest on past costs incurred shall accrue from the date of this
demand for payment or any earlier demand, whichever is earlier;
interest on future costs shall accrue from date of expenditure,
pursuant to CERCLA § 107(a), 42 U.S.C § 9607(a). Interest rates are
variable. The rate applicable on any unpaid amounts for any fiscal
year is the same as is specified for interest on investments of the
Hazardous Substance Superfund which is determined by the Department
of the Treasury. The current annual rate of interest on unpaid costs
is [x.xx%].
EPA is not required by CERCLA to issue a written demand for recovery
of prejudgment interest. However, the date a written demand is made
may be used by a court in determining the date from which prejudgment
interest begins to accrue.
In the event that you file for protection in the Bankruptcy Court,
EPA reserves its right to file a Proof of Claim or Application for
Reimbursement of Administrative Expenses against the bankrupt's
estate.
Remittance must be made payable to the "U.S. EPA Hazardous Substance
Superfund" established pursuant to CERCLA in Title 26, Chapter 98 of
25
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OSWER t 9832.18
the Internal Revenue Code, and must reference the [insert name]
facility. Please send your remittance to:
EPA - Region
Attn: Superfund Accounting
P.O. Box [insert Superfund Lock Box]
Pittsburgh, PA 15251
[Not*: for Region 4 and 5 the mailing address is slightly
different.]
* Excerpted with modifications from "Interim Guidance on Notice
Letters, Negotiations, and Information Exchange, "Appendix C (October
17, 1987, OSWER Directive No. 9834.10).
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OSWER # 9832.18
APPENDIX B
SAMPLE SUMMARY OF COSTS
U.S. EPA Headquarters
Payroll $ZZ.ZZ
Travel m $ZZ.ZZ
U.S. EPA Region
Payroll (CDMS) $XZ.ZZ
Travel $XZ.ZX
Indirect Costs $ZX.XX
Cooperative Agreement
(letter of credit documentation) [state]* $XX.XX
EPA Contracts
Field Investigation Team $XX.ZX
Technical Assistance Team $XX.XX
Enforcement Support $XX.XX
CLP $XX.XX
Interest as of (date) $XX.XX
*Be sure to reconcile differences with states before issuance.
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OSWER f 9832.18
APPENDIX C
INDEX OF EXISTING RELEVANT GUIDANCE
Guidance on Administrative Records for Selecting CERCLA Response
Actions. December 3, 1990, OSWER Directive No. 9833.3A-1. This
guidance addresses the procedures to ensure that EPA's administrative
records meet the following purposes: 1) to ensure that the basis for
the response selection is set forth in the record and that judicial
review concerning the adequacy of a response selection is limited to
the record; and 2) to serve as a vehicle for public participation in
the selection of the response action.
Superfund Cost Recovery Strategy. July 29, 1988, OSWER Directive No.
9832.13. This document sets forth EPA's case selection guidelines and
priorities; it emphasizes the advance planning necessary to initiate
cost recovery actions and describes the cost recovery process for
removal and remedial actions.
Financial Management of the Superfund Program. July 25, 1988. This
document establishes financial management policies unique to the
Superfund program which require accounting for costs by site and
activity for purposes of cost recovery and external reporting.
Revision of CERCLA Civil Judicial Settlement Authorities under
Delegations 14-13-B and 14-13-E. June 17, 1988, OSWER Directive No.
9012.10-A. Delegation 14-13-B allows a Regional Administrator to
exercise EPA's concurrence authority in settlement of certain
Regionally initiated CERCLA civil judicial actions and to request the
Attorney General to amend a consent decree. Delegation 14-14-E allows
Regional Administrators to exercise EPA's concurrence on de minimis
settlements under CERCLA S 122(g) with advance concurrence.
Guidance on Documenting Decisions Not to Take Cost Recovery Action.
June 7, 1988, OSWER Directive No. 9832.11. EPA has the discretion to
decide whether or not to pursue an action for recovery of any
unreimbursed Superfund monies; if the decision is not to pursue a
case, EPA must prepare a close-out memorandum. This guidance
discusses the contents of this close-out memorandum*
Removal Cost Management Manual. April 1988, OSWER Directive No.
9360.0-02B. EPA has developed this manual to provide comprehensive
cost management procedures for use by the On-Scene Coordinator and
other on-site personnel at Superfund removal actions.
Superfund Removal Procedures (Revision No. 3), February 1988, OSWER
Directive No 9360.0-03B. Revision Number Three contains detailed
explanations of cost control, cost documentation, use of the Removal
Cost Management Manual, and further guidance on the importance of cost
documentation as it relates to Superfund removal procedures.
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OSWER t 9832.18
Expansion of Direct Referral of Cases to the Department of Justice.
January 14, 1988, OSWER Directive No. 9891. 5A. In an effort to
streamline the enforcement of CERCLA and non-CERCLA cases, EPA has
prepared this guidance of updated policy and procedures expanding its
direct referral of cases to the Department of Justice.
State Superfund Financial Management and RecordXeepino Guidance.
November 1987, Office of the Comptroller, Financial Management
Division.
Guidance OB Federal Superfund Liens. September 22, 1987, OSWER
Directive No. 9832.12. This guidance provides analysis of statutory
issues regarding the nature and scope of federal liens under § 107(1)
of CERCLA, EPA policy on filing a federal lien to support a cost
recovery action, and procedures for filing a notice of lien, which
includes an example of a notice of a Superfund lien.
Potentially Responsible Party Search Manual. August 27, 1987, OSWER
Directive No. 9834.3-1A. This manual provides guidance to EPA and
state personnel in identifying potentially responsible parties (PRPs) ,
recognizing the elements of a completed PRP search, and describing in
detail 28 tasks which may be completed during a PRP search.
PRP Search Supplemental Guidance for Bites in the Superfund Remedial
Pyogra^ f June 16, 1989, OSWER Directive No. 9834.3 2a. This
supplemental guidance describes PRP search planning and management
and the content of PRP search reports.
Cost Recovery Actions/Statute of Limitations. June 12, 1987, OSWER
Directive No. 9832.9 This memorandum updates EPA's policy on the
timely filing of cost recovery actions and clarifies the Agency's
position on priorities for removal cost recovery referrals.
September 1986. This handbook establishes EPA's Agency-wide
procedures to ensure that accurate and adequate controls exist for
documenting EPA's Superfund cleanup costs so that they fully reconcile
with EPA's Financial Management System.
Policy en Recovering Indirect Costs in CERCLA Cost Recovery Actions.
June 27, 1986, OSWER Directive No. 9832.5. This memorandum clarifies
EPA's policy on the recovery of indirect costs in CERCLA cost recovery
actions and provides guidance on deciding whether or not to seek
indirect costs.
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