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\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
o
f MAY 2 7 1988
OSWER Directive 09834.9a
MEMORANDUM
SUBJECT: Interim Policy on Mixed Funding Settlements Involving
the Preauthorization of States or Political
Subdivision^
FROM: J. Winston Porter
Assistant Administrator
Office of Solid Waste and Emergency Response
Thomas L. Adams, Jr.
Assistant Administrator
Office of Enforcement and Compliance Monitoring
TO: Regional Administrators, Regions I - X
I. INTRODUCTION
The purpose of this memorandum is to establish the Agency's
interim policy on the use of mixed funding settlements that
involve the preauthorization of States or political subdivisions
when such parties are potentially responsible parties (PRPs) at
Superfund sites. * This memorandum addresses one specific
question that arose during negotiations at a municipal landfill.
The question was whether the Agency could approve a request for
preauthorization submitted by a political subdivision seeking to
file a claim against the Fund for reimbursement of a portion of
response costs at a Superfund site. The question of whether a
political subdivision is eligible to request preauthorization in
the context of a mixed funding settlement was resolved during a
November 1987 Assistant Administrator Review Team (AART) meeting.
This policy formalizes that decision and is expanded to include
States as well.
1 This policy supplements the guidance on "Evaluating Mixed
Funding Agreements Under CERCLA." The Mixed Funding guidance
presents a method for determining whether it may be appropriate
to settle for less than 100% of response costs and provides
examples of the types of sites that are good and poor candidates
for mixed funding. This guidance was signed on October 20, 1987
and was issued under OSWER Directive #9834.9.
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OSWER Directive //983A.9a
II. ISSUE
Mixed Funding (Section 122(b)(l))
Section 122(b) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 as amended by the
Superfund Amendments and Reauthorization Act of 1986 (CERCLA)
authorizes EPA to enter into mixed funding settlements with PRPs.
Section 122(b)(l) authorizes one type of mixed funding where PRPs
agree to perform the response activity and the Agency agrees to
reimburse the PRPs for a portion of their response costs. The
Agency implements this type of mixed funding by approving the
PRP's request for preauthorization to undertake the response and
by awarding monies from the Fund once the response action is
completed.
The term preauthorization refers to the approval that PRPs
must obtain from EPA prior to the conduct of cleanup actions and
before a claim for reimbursement of response costs is presented
to the Fund. If preauthorization is granted, it serves as an
Agency commitment that, if the response is conducted pursuant to
the settlement agreement and the costs are reasonable and
necessary, reimbursement will be available from the Fund as
specified by the agreement. EPA will grant preauthorization to
PRPs only in the context of settlement agreements. 2
Although section 122(b)(l) provides authority for mixed
funding, it does not specify a mechanism for permitting the Fund
to be used for this purpose. CERCLA's principal claims mechanism
is section 111 (a) and the Agency uses this mechanism for
reimbursing PRPs for a portion of their response costs pursuant
to a mixed funding agreement.
Reimbursement of Claims (Section 111(a))
Section 111(a) provides that the President shall use the
money in the Fund for:
(1) payment for governmental response costs incurred
pursuant to section 104 ...
(2) payment of any claim for necessary response costs
incurred by any other person ... (emphasis added).
2 For a more detailed discussion about preauthorization see
the guidance on "Evaluating Mixed Funding Settlements Under
CERCLA" cited earlier.
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OSWER Directive //9834.9a
A question arose on the precise meaning of "any other
person" under section lll(a)(2). Specifically, the question was
whether, when read in conjunction with section lll(a)(l), "any
other person" means any person other than a governmental entity.
The Agency believes that "any other person" can include
governmental entities when they are PRPs and when they are acting
pursuant to a settlement agreement as discussed below. Note that
any person who plans to file a claim against the Fund under the
section 111(a)(2) response claims process must first obtain
preauthorization (i.e., prior EPA approval).
III. PREAUTHORIZATION OF STATES OR POLITICAL SUBDIVISIONS
In considering mixed funding at a site that involves a State
or political subdivision as a PRP, the Region must first
determine whether the offer is an acceptable candidate for mixed
funding. This determination must be made at all sites where
mixed funding is being considered and must be made by applying
the criteria established in the "Interim CERCLA Settlement
Policy" and the guidance on "Evaluating Mixed Funding Agreements
Under CERCLA." 3
The Settlement Policy establishes ten criteria that must be
applied to a settlement offer to determine whether it is
appropriate to settle for less than 100% of response costs. The
Mixed Funding guidance provides a more detailed discussion about-
how to apply the ten settlement criteria to mixed funding
settlement offers, including a discussion about which factors
generally make an offer an acceptable candidate for mixed
funding.
The Region must also consider the following additional
criteria. States or political subdivisions are eligible to file
claims against the Fund only when:
(1) the State or political subdivision is a PRP under
section 107 at the site; and
(2) the State or political subdivision will carry out the
response pursuant to a settlement agreement under
section 122.
3 The "Interim CERCLA Settlement Policy" was issued under
OSWER Directive #9835.0 on February 5, 1985. The Mixed Funding
guidance was cited earlier.
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OSWER Directive #9834.9a
If you have any questions or comments regarding this interim
policy, please contact Kathleen MacKinnon in the Office of Waste
Programs Enforcement at FTS-475-9812.
cc: Jon Cannon, OWPE
Lisa Friedman, OGC
Edward Reich, OECM
Henry Longest, OERR
David Buente, DOJ
Waste Management Division Directors, Regions I - X
Regional Counsels, Regions I - X
Municipal Settlement Workgroup Members
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