UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. D.C. 20460
                                                         9375.5-02
                                                      OFFICE OF
                                             SOLID WASTE AND EMERGENCY RESPONSE
MEMORANDUM
                                               MAY   I  1989
SUBJECT
FROM
TO
     Political Subdivision-Lead for Remedial^ Response -
     Directive 9375.5-03
     Henry L. Longest II, Director
     Office of Emergency and Remedial
                                                 ise
     Director, Waste Management Division
       Regions I, IV, V, VII, VIII
     Director, Emergency and Remedial Response Division
       Region II
     Director, Hazardous Waste Management Division
       Regions III,  VI
     Director, Toxic and Waste Management Division
       Region IX
     Director, Hazardous Waste Division
       Region X
I.    Purpose

     To provide guidance to Regions, States, and political
subdivisions thereof, on the designation of a political
subdivision as the lead agency for remedial response under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of .1986 (CERCLA).  This guidance applies  to
Fund-financed remedial response only and does not apply to pre-
remedial, removal, or enforcement activities.   In addition, this
guidance does not apply to Federally-recognized Indian Tribes.
Separate guidance on Federally-recognized  Indian Tribes will  be
forthcoming.
II
Background
     This Directive supersedes'Directive 9375.1-6,  February  12
1987, "Cooperative Agreements with Political  Subdivisions  for
Remedial Response."  We have since strengthened  our original

-------
                                                   Directive 9375.5-03


guidance because of section 121 of CERCLA which assigns States
specific responsibilities during, Fund-financed response.   The
Agency has also promulgated 40 CFR 35 Subpart 0, the Super fund
assistance regulation entitled, "Cooperative Agreements and
Superfund State Contracts for Superfund Response Actions."  This
regulation requires the use of a three-party Superfund State
Contract to ensure adequate involvement by the State pursuant to
section 121(f) of CERCLA and to ensure that the CERCLA section
104 State assurances are provided in the SSC at the time of
remedial action if a political subdivision is designated the lead
agency.

   The changes to our earlier guidance are, therefore;

     1)    A legally binding document is now required to specify
          State involvement under CERCLA section I21(f) if a
          political subdivision has the lead for remedial
          response activities, including rerrredial planning.

     2)    States were previously able to document their CERCLA
          section 104 State assurances in a management assistance
          cooperative agreement during a political subdivision-
          lead.  This is no longer allowaJd-le.  However, a State
          may still receive money for management assistance, nov
          called "support agency assistance," in a cooperative
          agreement.

     3)    A three-party Superfund State Contract is required
          before any cooperative agreement funds can be obligated
          for a political subdivision-lead, and such SSC must be
          amended to add the CERCLA section 104 State assurances
          before a remedial action (RA) can be added to a
          political subdivision-lead cooperative agreement.

     These changes will allow us to comply with the new CERCLA
section 121 requirements, and to provide a binding agreement
process for the fullest possible involvement of all parties  (ETA,
States and political subdivisions) in Superfund response actions.

     This is one in a series of Directives to carry the number
9375.5 which is guidance relating to State, political subdivision
and Federally-recognized Indian Tribe involvement  in  the
Superfund program.  We recommend setting aside  a special binder
for the Directives in this 9375.5 series.  Indexing and
keywording will be done under the Office of Solid Waste and
Emergency Response  (OSWER) Directives system.

-------
                                          Directive No.  9375.5-03
III.  Introduction

     Section 104(d)(l) of the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (CERCLA),
permits EPA to transfer Federal funds and to authorize States,  or
political subdivisions thereof, to undertake response activities
at sites via a cooperative agreement.  If both the State and EPA
agree, a political subdivision with the necessary capabilities
and jurisdictional authority may assume direct management
responsibility for site activities.  However, since section
121(f) of CERCLA assigns States specific responsibilities during
Fund-financed response, the State must enter into a Superfund
State Contract (SSC) with both EPA and the political subdivision
before EPA will award a cooperative agreement to a political
subdivision for remedial response.  This SSC is required for a
political subdivision-lead, even if the cooperative agreement to
be awarded to the political subdivision is for remedial planning
activities (remedial planning activities include remedial
investigation, feasibility studies, and remedial design).  If the
political subdivision will have the lead for remedial action,  the
three-party SSC must be amended to include the appropriate CERCLA
section 104 assurances before funds may be obligated to the
political subdivision under a cooperative agreement.  The state
must provide these assurances in the three-party SSC for a
political subdivision-lead remedial action.  Even if the
political subdi/ision is designated as responsible for carrying
out a specific statutory assurance, the State must still agree to
assume responsibility in the event of default or inability of a
political subdivision to fulfill its assigned responsibilities.

     The procedure for authorizing a political subdivision lead
is not complex, but it does require planning and coordination by
each government entity.


IV.  Designation of a Political Subdivision as the Lead Agency
     for Remedial Response

     Approval of a political subdivision-lead for remedial
response is discretionary and requires the full support and
endorsement of the appropriate State Superfund Agency Director,
as well as the EPA Regional Administrator.  What legally
constitutes a "political subdivision" differs from State to
State; therefore, the State must determine what unit of
government meets its legislative definition of a political
subdivision.

-------
                                        Directive No.  9375.5-03


     Whenever possible, if a political subdivision desires to take
the lead for remedial response at a site, the State and EPA should
determine the appropriateness of the political subdivision-lead
during the State's and EPA's annual consultations.  The Superfund
Comprehensive Accomplishments Plan (SCAP) should then indicate that
the response action is a political subdivision-lead.

     In all cases, the final decision on whether direct
participation by the political subdivision is more economical or
efficient than a State- or Federal-lead rests with the Regional
Administrator.  However, in the event that a political subdivision
is a potentially responsible party (PRP), the Region should contact
the Headquarters Program office at the lead designation stage.
While being a PRP does not preclude the political subdivision from
receiving a cooperative agreement pursuant to section 104(d)(l)  of
CERCLA, the Agency may make the determination that a settlement
pursuant to section 122 of CERCLA would be the better course of
action.
V.   Response Agreement Options for a Political Subdivision-Lead
     Remedial Response

     There are two options for political subdivision-lead remedial
response that ensure State involvement and provide the mechanism
for obtaining the State's required assurances.

         o   A cooperative agreement with a political subdivision
             along with an enforceable three-party SSC defining
             the roles and responsibilities of the signatories and
             providing the vehicle used to obtain the State's
             CERCLA section 104 assurances.

         o   A cooperative agreement with the State with a "pass
             through" to a political subdivision, along with a
             two-party Intergovernmental Agreement prior to costs
             being incurred for field activities.

Both of these options are discussed in further detail below.

     A.  Award of a Cooperative Agreement to a Political
         Subdivision                                   ~

     A.I Cooperative Agreement Application and Review Process

     Applications submitted directly to EPA by a political
subdivision will not be acted upon unless the designated State
Superfund Agency and EPA have agreed that the political

-------
                                        Directive  No.  9375.5-03


subdivision is capable of undertaking the lead  for remedial
response and has jurisdictional responsibility  for the site.

     In support of its cooperative agreement application,  the
political subdivision must provide an analysis  of  its  capabilities
to perform remedial work.  EPA and the State will  use  the  analysis
to determine the appropriateness of a political subdivision-lead
remedial response.  This analysis must include  the following:

     o   History of the political subdivision's involvement  at  the
         site so that EPA may determine if the  political
         subdivision is a potentially responsible  party (PRP);

     o   Evidence that the political subdivision has a demonstrated
         history in addressing problems at the  site;

     o   Evidence that the political subdivision has experience in
         performing work similar to that to be  funded  in  the
         cooperative agreement;

     o   Justification that direct participation by the political
         subdivision is likely to be more economical or efficient
         than a State- or Federal-lead;

     o   Evidence that the political subdivision has the  existing
         authority to conduct the remedial activities;

     o   Evidence that the political subdivision has the  existing
         authority to enter into a cooperative  agreement  with  the
         Federal Government and the financial and  management
         capabilities to administer Federal funds;

     o   Indication that the political subdivision has an
         established liaison role with State and local agencies
         involved in problems at the site;

     o   Justification of the political subdivision's  capability to
         comply with 40 CFR Parts 31 and 35 Subpart 0 and other
         appropriate Federal regulations.

     There is no substantive difference between the application
development' and review process for political subdivision-lead  and
that for State-lead Superfund cooperative agreements.
Applications, scopes of work, and budget information must be
prepared and submitted by the political subdivision in accordance
with Superfund cooperative agreement requirements  specified in
section 35.6115(c) of 40 CFR Part 35 Subpart 0, "Cooperative
Agreements and Superfund State Contracts for Superfund Response
Actions."  The political subdivision must satisfy the same

-------
                                        Directive  No.  9375.5-03


regulatory requirements and must adhere to the same standards of
accountability as any other recipient  of CERCLA funds.

     A.2 Cooperative Agreement Award

     Pursuant to 40 CFR 35.6115 a Superfund cooperative agreement
for remedial response will not be awarded to a political
subdivision unless (1) the State, political subdivision, and EPA
have entered into a three-party SSC that satisfies the
requirements of section 121(f) of CERCLA, and (2)  if applicable,
the State has provided the appropriate CERCLA section 104
assurances at the time of remedial action.  A political
subdivision that enters into a Superfund cooperative agreement'
with EPA has the responsibility for 1) accomplishing the
activities agreed to whether it performs the work  itself or
engages contractors, 2) ensuring that  funds are properly accounted
for and expended by its agents in accordance with  Federal statutory
and regulatory requirements, and 3) complying with the requirements
of 40 CFR Part 300, the National Contingency Plan  (NCP).

     A. 3 The Three-Party Superfund State, .Contract  (SSC)

     The three-party SSC specifies the roles and responsibilities
of the signatories ensuring substantial and meaningful involvement
of the State in the initiation, development, and selection of  the
remedial action to be undertaken as specified in section 121(f)  of
CERCLA and as described in Subpart F of the National Contingency
Plan (NCP).  Such activities include:

         Review the final and draft RI/FS and comment on the
         proposed alternatives

         Provide State Applicable or Relevant and  Appropriate
         Requirements (ARARs)

         Review the proposed plan

         The opportunity to concur in the remedy  (the same as  for
       ,  Federal-lead procedures)

     —  With EPA, determine the need to pursue enforcement
         actions against PRPs  for conduct of the  response actions
                                  <
         Concur in any substantive changes  in the scope of work of
         project costs

         With EPA, jointly  inspect the  remedy at  the conclusion of
         the remedial action

-------