*        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY  '9052-
    f                     WASHINGTON. D.C. 20460
                          HUI I ^ JOO7                       OFFICE OF
                         JUN I 2 lyOl              SOLID WASTE AND EMEBGESCV
MEMORANDUM
SUBJECT:  Cost Recovery Actions/Statute of Limitations
M^Jl  f\*
Enforcemen
FROM:     Gene A. Lucero, Director
          Office of Waste Programs Enforcement

TO:       Directors, Waste Management Division/
          Regions I, IV, V, VII, VIII

          Director, Emergency and Remedial Response Division,
          Region II

          Directors, Hazardous Waste Management Division,
          Regions III, VI

          Director, Toxic and Waste Management Division,
          Region IX

          Director, Hazardous Waste Division, Region X

     The purposes of this memorandum are to:

     1.   Update EPA's policy on timing of cost recovery action  (This
          memorandum supersedes Timing of Cost Recovery Action,  G.
          Lucero, October 7, 1985). -

     2.   Request that you bring your personal attention to  the
          accuracy of data being used-to brief Congress on the status
          of cost recovery efforts at sites.

     3.   Request the initiation of cost recovery action for  those
           its where the statute of limitations date is approaching.    .

     It r*ins the Agency's goal, where appropriate, to seek  recovery
of all monies expended at Superfund sites.  Moreover, to promote cost
recovery and obtain interest, the Agency will  transmit demand  letters
as early as practicable.  Additional guidance  on the timing  and  content
of demand letters, including guidance on maximizing  interest,  will  be
sent in the near future.

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                                                        9832.9
 I.   Timing  of Cost Recovery

      Section 113(9)(2) f  the Comprehensive Environmental Response,
 Compensation and Liability Act  (CERCLA), as amended by the Superfund
 Amendments  and Reauthorization  Act  (SARA), contains specific provisions
 on  the  statute of limitations for cost recovery actions under section
 107.  This  memorandum does not  set  forth the statute of limitations for
 pre-SARA response actions.  Section 113(g) requires that cost recovery
 actions be  commenced:

     A.   for removal actions,  within three years aftfer completion of
          the removal action.   Where the Agency has made a deter-
          mination to grant a waiver under section  104(c)(l)(C) for
          continued response action, the cost recovery action must be
          brought within six years  after  this determination; and

     B.   for remedial actions, within six years after the initiation
          of physical on-site construction of the remedial action.  If
          the remedial action is initiated within three years after
          completion of the removal action, the removal costs may be
          recovered under the remedial action statute of limitations
          for cost recovery (i.e. within six years after the initiation
          of on-site construction of the remedial action).

     The term "commenced" as used in section 113(g) means a
filed section 107 cost recovery action.  As a matter of policy, the
Agency views completion of the  removal action as the day the cleanup
contractor demobilizes at the site  and completes the scope of work
identified in the original or modified action memorandum.  The final
Pollution Report (POLREP) submitted by the OSC normally contains this
information.  (See Superfund Removal Procedures, Revision #2,
August 20, 1984).  Remedial investigations/feasibility studies  (RI/FS)
may fall within the statutory definition of removal action.  For
purposes of cost recovery they  should be treated as a separate removal
action.  Therefore,  a cost recovery action should be commenced within
three years of completing the original removal  (exclusive of the RI/FS)
unless physical on-site construction has started.

     Although section 113(g)(2)(A)  of CERCLA, as amended, allows three
years frov^conpletion of a removal  to initiate cost recovery action,  it
still reaci'ni our policy to begin cost recovery activity within one
year after completion of the removal.  For remedial actions/ Agency
policy requires that cost recovery  activity be initiated within 18
months after the signing of the Record of Decision (ROD) or during the
later phase of construction of  the  remedial action, if the construction
is expected to take more than two years after the ROD is signed.
Adherence to these time frames  will ensure that current, not stale,
evidence and knowledgeable witnesses will be available to support  the
prosecution of the action and that  the Agency will not be faced with
statute of limitation risks.

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                                                           9832.9
     At this point it is appropriate to clarify the Agency's position
on priorities for removal cost recovery referrals.   Due to the resource
commitment of litigation/ the Agency has established that cost recovery
cases where the costs exceed $200,000 should take priority for
referral.  There is no prohibition on referring cases under $200,000.
However, the judicious use of limited resources dictates that the
Agency first address those sites which promise a better return on the
Agency's time and money investments.  Where appropriate, cases under
$200,000 have been and should continue to be referred.   Selection of
cases for referral is a Regional determination which should be based  on
a variety of factors including strength of evidence, financial
viability of defendants and likely return to the Agency including
enforcement costs.

     Section 122(h) of CERCLA now provides the Agency with the
authority necessary to compromise claims for cost recovery actions
where the total of all response costs expended at a site is less than
$500,000.  This new authority should assist the Agency in addressing
the lower dollar value cases without litigation where an appropriate
settlement can be made.  The Agency is currently developing procedures
for settlement of claims under $500,000.

II.  Update of Information

     Attached for your review is information on completed removals for
each of your Regions.  Please review this information and, using the
comment field provided, indicate your schedule for referral of cost
recovery action.  Cost recovery actions may not be appropriate for some
sites:  for example, where no PRP can be identified, or where the PRPs
are not financially viable.  If you do not intend to refer the case,
please note this fact.  Where you decide that cost recovery action is
inappropriate, you should explain the decision not to take cost
recovery action in a signed memorandum in your files.  You should
assume that there will eventually be audits of these cases, by
Headquarters, and perhaps the Inspector General and Congressional
Oversight Committees.

     Pleas* use the following categories when completing the comment
field for sites where actions will not be referred:

     1) No PRPs identified
     2) PRPs not financially viable
     3) Questionable evidence
     4) Questionable legal case
     5) other  (specify)

     The accuracy and completeness of this information  is critical to
our ability to demonstrate the effectiveness of EPA's cost  recovery
program.  The current data, which has been provided  in  response  to
Congressional requests,  indicates  that EPA has initiated cost  recovery
efforts at only 29% of the completed removal sites.   (They  account for
approximately 52% of the available obligations).  To the extent

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                                                       9832.S
 information was available, the above figure
 recovery was determined by subtracting from
 removals, those where it appeared that cost
                   on cases subject to cost
                   the universe of completed
                   recovery is inappropriate.
     While we believe that our data base may not be current, the low
level of case initiation does point out the need for serious managemen'
attention.  A referral should be planned in this or next years
Superfund Comprehensive Accomplishments Plan (SCAP) and so indicated or
the attached reports.  Where action is not appropriate, it is critical
that the data base be adjusted to so indicate.   Please provide your
comments and schedule for activity on the attached material within two
weeks.

III.  Initiation of Actions

     If, after review of the attached site information, there are any
cases which require filing immediately or in the near future, please
advise OWPE, OECM and the Environmental Enforcement Section of the
Justice Department immediately, so that we may expedite the referral
and filing process.  All planned referrals should be incorporated into
the Integrated SCAP.
     We will provide you
ongoing remedial actions
quarterly basis for your
suggestions on the chart
with updates of removal completions and
(similar to the attached charts) on a
review and comment.  We also solicit you!
format and content.
     Any questions on this memorandum or the attached information may
be addressed to Janet Farella of my staff.  She may be reached on
FTS 382-2034.
ATTACHMENTS

cc:  Edward E. Reich, OECM
   '  David Buente, DOJ
     Regional Counsels, Regions I-X

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