United States
Environmental Protection
Agency
oEPA
Office of
Solid Waste and
Emergency Response
DIRECTIVE NUMBER: 9835.2
TITLE: QJDIMCE ON DRAFTING CONSENT DECREES
W HAZARDOUS WASTE CASES
APPROVAL DATE: MAY i, 1985
EFFECTIVE DATE: mx l, 1985
ORIGINATING OFFICE: OWPE
B FINAL
D DRAFT
STATUS:
REFERENCE.(other documents):
OSWER OSWER OSWER
VE DIRECTIVE DIRECTIVE Dl
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6 EPA
United States Environmental Protection Agency
Washington, OC 20460
QSWER Directive Initiation Request
Interim Directive Number
9835.2
Originator Information
Name of Contact Person
John Cross
Mail Code
WH-527
Telephone Number
475-6770
Lead Office
D OERR
D OSW
D OUST
H OWPE
D AA-OSWER
Approved for Review
Signature of Office Director
- a.
Date
Title
Guidance on Drafting Consent Decrees in Hazardous Waste Cases
Summary of Directive
inis guidance supplements the Agency's "Interim CERCLA Settlement Policy"
It focuses on the consent decree provisions which are vital to settlement
in hazardous waste cases, but which are handled differently (or not at all)
under other programs.
Key Vfords: guidance, consent decree, draft, settlement,
hazardous waste
Type of Directive (Manual. Policy Directive. Announcement, etc.)
Guidance Memorandum .
Status
U Draft
Final
J New
I I Revision
Does this Directive Supersede Previous Directive(s)? Pi Yes |\j
If "Yes" to Either Question, What Directive (number, title)
Interim CEKCLA Settlement Policy - 9835.0
No Does It Supplement Previous Directive(s)? [_j(Yes \_\ No
Review Plan
D AA-OSWER
D OERR
D OSW
D OUST
L3 OWPE
II Regions
LJ OECM
D OGC
D OPPE
Other (Specify)
This Request Meets OSWER Directives System Format
Signature of Lead Office Directives Officer
Date
- 30-
Signature of OSWER Directives Officer
Date
EPA Form 1315-17(10-85)
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OSWER # 9835.2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAY 1865
MEMORANDUM
SUBJECT
FROM:
TO:
Drafting Consent Decrees in Hazardous Waste Imminent
Hazard Cases
Courtney M.
Assistant Administrator for Enforcement
and Compliai^be ^pnitoring
Jack W.
Acting Assi's't&nt Administrator for Solid Waste
and Emergency Response
Regional Administrators
INTRODUCTION
On October 19, 1983, the Office of Legal and Enforcement
Counsel issued guidance on drafting judicial consent decrees.
That document provides general guidance on drafting consent
decrees for settlement of hazardous waste cases, provides a
checklist of provisions which ordinarily should appear in a
decree, and offers sample language for many commonly used
consent decree terms.
As the Agency enters into more and more consent decrees as
part of the hazardous waste program, there has arisen an
increasing need for supplemental guidance specific to imminent
hazard enforcement actions under the Comprehensive
Response, Compensation, and Liability Act (CERCLA)
7003 of the Resource Conservation and Recovery Act
These actions share common factual circumstances and yet are
sufficiently distinct from other enforcement programs to warrant
separate additional guidance. For example, many hazardous
waste cases are characterized by multiple defendants, raising
unique liability issues which must be addressed in each decree.
This guidance document will focus on those consent decree
provisions which are vital to settlement in hazardous waste
cases, but which are handled differently (or not at all) under
'other programs.
Environmental
and sec-tion
(RCRA) .
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The guidance is based upon and supplements the Agency's
settlement policy as stated in a memorandum entitled "Interim
CERCLA Settlement Policy" (hereinafter "Settlement Policy")
which we issued, along with Hank Habicht of the Department of
Justice, on December 5, 1984. EPA enforcement personnel should
interpret and apply this memorandum consistently with the
Settlement Policy and any subsequent revisions thereto.
Each decree will be negotiated amidst widely varying factual
situations. Thus it is not appropriate to mandate the inclusion
of model terras in each hazardous waste decree. Rather, this
memorandum is intended to suggest ways of achieving the govern-
ment's settlement goals. The sample consent decree provisions
may be incorporated as is or modified to accommodate the
inevitable eccentricities present in each case.
^
I. Releases and Contribution Protection
Although the greater portion of this memorandum addresses
terms which the government wi.shes to include within consent
decrees, it is also useful to discuss the major provisions
which are generally requested by responsible parties in settlement
discussions, i .-e. , releases, covenants not to sue, and protec-
tions against contribution. Since releases directly affect
liability for current and 'future, hazards posed by. a site, these
provisions must be drawn as narrowly as possible.
A. Scope of Release
The Agency's policy, absent extraordinary circumstances,
is to grant releases from liability only for that part of a
cleanup performed or funded .by the responsible parties. If
only surface cleanup has been effected, the release should
clearly be limited to liability for the work undertaken to
respond to surface contamination (as defined in the decree),
and should expressly reserve our right to bring actions against
the settling and non-settling parties for all other removal or
remedial activities. The release ordinarily should not forgive
government oversight, monitoring, and enforcement costs,
unless the settlement payment takes these costs into account,
nor should it include natural resource damages without the
consent of the trustee.
The consent decree should clearly state that the release
only extends to named parties to the agreement, and not to all
parents, subsidiaries, and affiliates, unless 100% of the
cleanup costs are recovered. Judicial or administrative causes
of action against any other parties are to be reserved. This
language is particularly crucial where State law may require
the release of all joint tortfeasors if a release is given to
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OSWER # 9835.2
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any one of them. Although it is our view that CERCLA calls
for uniform federal rules of decision, as a precautionary measure
consent decree releases in these States should be phrased in
terras of a covenant not to sue in order to minimize the possibility
that non-settling parties would be released from liability by
the decree. Furthermore, the release should not extend to
liability under any statutory claim which did not form the
basis for the complaint or clearly apply to the activities of
the settling party. (For example, a RCRA subtitle C regulatory
action release should not cover liability under section 3013
or 7003 of RCRA or section 106 of CERCLA). Similarly, a release
or covenant not to sue should -expressly apply only to civil
liability. Finally, in most cases (see the Settlement Policy,
page 15), releases should specifically reserve the defendant's
redisposal liability, i.e., liability arising from off-site
disposal of wastes removed from the site.
B. Timing of Releases
Many responsible parties have sought to obtain
releases which become effective in advance of completing the
needed abatement actions. As a general rule, the Agency should
require that releases only become effective when all .of the
work (including monitoring ') has been completed to ..EPA1 s'
satisfaction, whether defendants financed or conducted the
work.
C. Limiting Releases to Account for an Inadequate Remedy
Although settlement agreements are often designed to
accomplish a complete and permanent remedy, the Agency must
protect itself from the possibility that the chosen remedial
option will fail to entirely abate the releases at a site and
the potential for an imminent and substantial endangerment
resulting therefrom. The Agency should use the consent decree
to minimize the risk that the government will be left to finance
a future cleanup resulting from failure of the remedy at the
site.
1. Where circumstances permit, compliance with
the decree should be linked to achieving enforceable performance-
based standards. The Agency must be in a position to move
against the settling parties for failure to attain a standard.
To the extent possible, the decree should not merely be a
broadly phrased agreement on a remedy designed to generally
meet the goals and objectives of the decree or the statute at
issue.
2. The decree should contain detailed oversight,
operation, maintenance, inspection, and monitoring requirements-
designed to prevent and uncover deviations from technical
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OSWER #9835.2
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standards over an extended period of time. These requirements
should be embodied in workplans submitted for approval pursuant
to the decree.
3. The decree should contain financial responsibility
requirements, (discussed below), sufficient to cover any costs
arising from failure of the remedy.
4. The decree" should clearly articulate any assumptions
upon which the remedial program is based. For example, a remedy
may be designed with certain characteristics of the surrounding
area in mind. If land use patterns change, (tor example, where
a previously unused aquifer is tapped for drinking water), the
level of protection afforded to the environment by the remedy
may be insufficient Co protect human health. If any or the
stated assumptions change, the Agency should reserve the right
to pursue modifications to the remedial program.
5. Finally, the decree should contain a clause
authorizing the government to reopen the decree if the site
may present an imminent and substantial endangerment to the
public health or welfare or the environment due to:
The discovery of previously unknown or
undetected conditions at the site; or
the receipt of new information concerning
the scientific premises of the decree.
(See the Settlement Policy, page 16.)
This reservation should allow the government to obtain further
remediation by ;he defendants or perform the work itself and
seek cost recovery. Despite best efforts at designing,
constructing, and implementing a remedial program, it is
inevitable that in a certain percentage of cases additional
work will have to be performed to eliminate such endangerments.
Responsible parties, of course, want the decree to
represent a final disposition of responsibilities. However,
hazardous waste site abatement technology has not progressed
to the point where the Agency can be relatively sure that the
remedial techniques selected and implemented today will provide
complete and permanent protection to the public on the hundreds
of sites where work has been or will.be performed. The five-part
program outlined above should maximize the degree of finality
afforded to settling parties consistent with the need to
safeguard the interests of the public.
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QSWER # 9835.2
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D. Contribution .Protection
Contribution is an equitable remedy based on .the
principle that one who has paid more than a reasonable propor-
tion of a judgment or debt is entitled to reimbursement from
other liable parties. The issue of contribution will be
particularly critical in multi-party cases that involve settle-
ments with fewer than all of the responsible parties and where
the government may still sue some or all of the non-settling
parties. Anticipating that the government may sucessfully
pursue a non-settlor, a defendant may demand that the United
States agree to protect it from any claim for contribution
from any non-settling party as a condition to signing a consent
decree. The effect of such a contribution protection clause
sought by a settling defendant would be to have the United
States agree to reduce its judgment against a non-sectling
responsible party by the amount of contribution ordered to be
paid by a settling defendant to the non-settling party in
subsequent litigation.
It is the Agency's view that contribution protection
clauses are largely unnecessary. Many States* have already
enacted laws which protect settlors .from subsequent contri-
bution actions. These laws have been modeled on Section 4 of
'the Uniform Contribution Among Tortfeasors Act (1955 Revision),
drafted by the National Conference of Commissioners on Uniform
State Laws, which provides:
"When a release or a covenant not to sue or
not to enforce judgment is given in good faith
to one of two or more persons liable in tort
for the same injury or the same wrongful death:
"(a) It does not discharge any of the other
tortfeasors from liability for the injury or
wrongful death unless its terms so provide;
but it reduces the claim against the others to
the extent of any amount stipulated by the
release or the covenant, or in the amount of
the consideration paid for it, whichever is
the greater; and,
* Seventeen States have adopted this Section or a similar
provision: Alaska, California, Colorado, Florida, Illinois,
Massachusetts, Michigan, Missouri, Nevada, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Virginia, and
Wyoming.
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"(b) It discharges the tortfeasor to whom it
is given from all liability for contribution
to any other tortfeasor."
Under this rule, once a reasonable, comprehensive, and good
faith agreement has been reached, settling parties would be
immune from third-party contribution claims.
The Agency is taking the position that federal courts
should use the model rule as the" standard for resolving
contribution questions. The United States.will be willing to
include language in a consent decree which states that it
is the intention of the parties that future contribution
actions against settlors be prohibited and encouraging courts
to consult the Uniform Act as the federal rule of decision.
Contribution protection clauses will therefore generally not
be necessary for consent decrees.
As the Settlement Policy .points out, however, providing
protection from contribution to settling defendants may be
appropriate, in-limited cases. If, under the law likely to be
applied, contribution actions by nonsettling defendants may
be permitted, EPA may consider providing contribution protection
when two factors are present:
1) the settlement addresses a very high percentage of the
total cleanup; and
2) the relative responsibilities of the responsible
parties can be clearly allocated, so that future actions are
not likely to reapportion liability.
On a case-by-case basis, the litigation team will assess whether
these factors and other circumstances in the case warrant
inclusion of contribution protection in the decree.
Of course, the greater the percentage of-cleanup covered
by the decree, the lower the risk that claims for contribution
will be successfully asserted against settling parties. Compre-
hensive settlements will maximize the chances that compliance
with the terms of the decree discharges a company's liability
for a site.
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E. Sample Language on Releases and Contribution
Protection
The following sample consent decree language assumes
that total cleanup has been or will be undertaken by the
responsible parties pursuant to EPA approved procedures. It
also assumes that the site is located in a State where the
release of one joint tortfeasor operates as a release on all
others.
Covenant Not to Sue
In consideration of work vjhich has been and
will be performed and payments which have
been made by the .Company under the terms of
the Decree, the Governmental Parties (herein-
after "Government") hereby covenant not to
bring any civil judicial or administrative
action against the Company and its officers
and employees for any claim or cause of
action cited in the Complaint relating to
"covered matters." "Covered matters" include
liability arising from [work performed under
the decree] and [specified costs incurred to
date]. The covenant shall become effective
upon completion to EPA's satisfaction, of the
remedial activities described in the attached
specifications. To the extent that State
law is deemed to govern liability arising
from activities related to the Site and the
interpretation of the terras of this Decree,
the parties do not intend this section to
serve as a general unqualified release.
This section should be construed as a covenant
not to sue the Company, and should not act
to release any other party from liability.
This covenant not to sue does not extend to
liability for damage to natural resources, as
defined in CERCLA, to liability arising from
hazardous waste removed from the site, or to
future monitoring or oversight expenses incurred
by the Government. In addition, notwithstanding
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any other provisions of this decree, the Government
reserves che right to seek modification to this
Decree or institute a new action to seek additional
remedial measures at the site, through an action
to compel the defendants to perform remedial work
or reimburse the Government for cleanup costs, if:
(1) at any time previously unknown or undetected
conditions at the Site present or may present an
imminent and substantial endangerment to the
public health or welfare or the environment;
(2) the Agency receives new information,
concerning the nature of the substances at
the site or the appropriateness ot the remedy
described in Appendix I, which indicates that
site conditions may present an imminent and
substantial endangerment to the public health
or welfare or the-environment.
(3) [there occurs a change.in one or more
assumptions upon which the remedial program
is based. (See discussion in part C above).]
The parties recognize the possibility that
there may be brought or asserted against the
Company suits or claims for contribution for
liability for covered matters by persons or
entities that have not entered into this
settlement that might,- if successful, obligate
the Company to pay amounts toward covered
matters in addition to those recognized in
this Decree. It is the expressed intention
of the parties that the Company not be required
to pay amounts in contribution for covered
matters or be required to remain as parties
in any suit or claim for contribution for
covered matters. It is also agreed that the
Government shall be under no obligation to
assist the Company in any way in defending
against such suits for contribution.
The parties represent that this Decree was
negotiated in good faith and that the
Company's undertakings at the Site represent
a fair and equitable assumption of the Company's
alleged responsibilities for covered matters
considering, among other factors, the fact that
it is in the best interest of the Government
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to encourage equitable settlements without
burdensome litigation. The parties agree
that federal law should govern questions
of contribution among parties that may be
adjudicated to be liable jointly or severally
for covered matters. The parties agree
that, in determining the appropriate federal
rule of decision to establish the effect of
this Decree on possible rights of contribution,
a court should adopt the principle set forth
in Section 4 of the Uniform Contribution Among
Tortfeasors Act.
JI. Site Access
It is essential that EPA have access to the site in order
to observe any work taking place and monitor compliance with
the terms of the decree. Language granting access should
provide access during the effective period of the decree and
describe the scope of the inspector's powers.
A sample site access clause is:
During the effective period of this decree,
EPA or its representatives, including
contractors, shall have access at all times
to the Site and all property owned or
controlled by the defendant for purposes of
conducting any activity authorized by CERCLA,
including but not limited to:
A. Monitoring the progress of activities
taking place;
B. Verifying any data or information
submitted to EPA;
C. Conducting investigations relating to
contamination at or near the site;
D. Obtaining samples at the site; and
E. Inspecting and copying records, operating
logs, contracts, or other documents
required to assess the defendant's
compliance with the Decree.
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In addition, Che defendant will not object to
EPA's obtaining, for the above purpose, access
to any establishment or place owned or operated
by any third party under contract with the
defendant. Nothing herein limits or otherwise
affects any right of entry held by EPA pursuant
to applicable laws, regulations, or permits.
Where it is necessary for EPA to have access to the -
property of a defendant for a long period of time, an easement
over the property may be desirable. The easement should run
with the land and be recorded to place all future purchasers
on notice.
It is important that access considerations be taken into
account at the beginning of a lawsuit in order that all
appropriate parties be brought under the court's jurisdiction.
The government may often want to name an "innocent" landowner
as a defendant solely for the purpose of facilitating access
to his or her property to conduct response activities.
III. Authority of the Signatories
Obviously it £s important that persons signing a
settlement agreement have authority to sign for and bind their
principals. Sample language to provide for this is:
Each of the signatories to this Decree certifies
that he or she is fully authorized to enter into
*he terms and conditions of this Decree and
to legally bind the party to the Decree so
represented by him or her.
Where there is any doubt regarding the commitment of the
principals to the decree, or in cases where substantial suras
are at stake, the government, in an abundance of caution, may
wish to require that the principals themselves be signatories
to the decree.
IV. Insurance/Financial Responsibility
A. Insurance. Where the cleanup is being conducted
by a responsible party, the party should be required to
protect both itself and EPA from liability, by1 purchasing
insurance or through another financial mechanism, from injuries
to third parties due to acts or omissions of the party conducting
the work. For example:
The Company shall purchase and maintain in
force insurance policies in the maximum amount
available, which shall protect the United
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States and the public against any and
all-liability arising out of the Company's
and its contractors' and other agents'
acts or omissions in-performance of the
work. Prior to commencement of work at
the Site, the Company shall provide EPA
with a certificate of insurance and a copy
of the insurance policy for EPA's approval.
B. Financial Responsibility. In addition to liability
insurance, it is important to have assurance that the party
conducting the work will have the financial capability to
complete the work. This can be accomplished by several means:
(1) Performance bond;
(2) Letter of credit;
(3) Guarantee by a third party; or
(4) The party conducting the work can present the
Agency with internal financial information sufficient to satisfy
the Agency that the party has enough assets "to make it unnecessary
to require additional assurances. If this method of financial
responsibility is chosen and if the terra of compliance within
the Decree is greater than one year, then the Decree should
provide for the party to annually submit internal financial
information. If the Agency then determines the financial
assurances to be inadequate, the Decree should provide that
the party can be required to obtain a bond or one of the other
financial instruments listed above.
A performance bond by a reputable company is generally
the preferred type of assurance. The bond should assure that
the work will be completed regardless of remaining cost. The
latter two mechanisms require a detailed examination of the
financial status of the party doing the work and the Guarantor.
No matter which financial instrument is used, EPA should be
authorized in the Decree to approve such instrument before it
is incorporated into the agreement.
V. Establishment of a Trust Fund
Frequently in multiple-party generator cases, the
generators will want to select a contractor to clean up the
site. If the contractor is a party to the litigation, the
consent decree may make the contractor expressly responsible
for the cleanup and the generators responsible for paying for
the cleanup. However, in order to assure completion of the
work, the generators should also remain liable until completion.
The funds to pay for the cleanup are collected in advance from
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the generators. The most commonly used mechanism for accomp-
lishing this is the establishment of a trust fund or escrow
account for paying the contractor. The trust fund or the
account can be administered by a State or other public entity
or a bank or similar entity experienced in administering trust
funds. Neither EPA nor other Federal agencies should administer
the fund. However, the Decree should provide that EPA must
approve the form of the Trust or escrow" agreement. The consent
decree should specify how the fund will be created, how much
money is to be deposited into the fund, and how disbursements
will be made from the fund. The fund account should earn
interest.
Disbursements are usually linked to completion of certain
milestones required by the decree. Agency approval may be
required for each disbursement. The final payment should not
be made until the contractor has certified, ana the Apency has
confirmed, that all work to be paid for by the fund has been
completed. .It may also be desirable to establish a schedule of
payments from the fund to assure that the money remaining in
the fund is sufficient to pay for completion of the cleanup
should the contractor default. The Decree should provide that
EPA does not guarantee the sufficiency of the fund. A sample
trust fund clause is:
Within three days after the entry of this
Decree, the Companies each shall pay-to the
site Trust Fund (hereinafter the "Trust Fund")
established at the Bank the sum which is shown
for that Company in Exhibit A hereto. Prior to
establishment of the Trust Fund, the fonn of the
trust agreement must be submitted to EPA
for its approval. The Trustee shall deposit
the money in an interest-bearing account
and use the money in the Trust Fund to pay the
Contractor to perform the Work described in
Exhibit B hereto (hereinafter referred to as
the "Work"), which Exhibit is hereby incorporated
by reference and made a part of this Decree as
though it were set forth verbatim. All money
remaining in the Trust Fund after completion
of the work, including interest earned, shall
be deposited in the Hazardous Substances Response
Trust Fund as recompense for response costs
incurred by the- United States not otherwise
reimbursed under the terms of this Decree.
EPA does not guarantee the monetary sufficiency
of the Trust Fund established by this section.
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A sample Schedule of Payment clause is:
The funds will be disbursed in accordance with
the following schedule.
(a) Upon entry of this Decree the Contractor
shall receive $100,000 from the Trust Fund.
(b) Upon completion and approval by EPA
of items 1, 2, and 3 of the Work, the
Contractor shall receive $300,000 from the
Trust Fund within no more than 20 days
after receipt of the Trustees of an applica-
tion for payment by the Contractor.
(c) Upon completion and approval by EPA,
of items 4, 5, 6, and 7 of the Work, the
Contractor shall receive $500,000 from the
Trust Fund within no more than 20 days after
receipt by the Trustees of an application for
payment by the Contractor.
(d) Upon, inspection of the Site and
certification by the United States that
' the Contractor has completed the Work, the
Contractor shall' receive $500,000 from the
Trust Fund within no more than 30 days after
receipt by the Trustees of an application
for payment by the Company. All remaining
money in the Trust Fund, including earned
interest, shall be deposited in the Hazardous
Substances Response Trust Fund.
VI. Restrictions on Conveyance
It is important that a subsequent purchaser of real
property is notified that the site is the subject of a consent
decree, and that he may be required to fulfill the terms
therein. There are several methods of providing such notice:
1. Depending upon the State, one may notify a
subsequent purchaser by recording or filing a copy of the
consent decree with the County Recorder (Registry of Deeds) or
Clerk of Courts, so that a title search would reveal the exis-
tence of the decree. Individual State law will have to be
considered as to the proper method of recordation.
2. The decree may require that the grantor notify
the plaintiff, prior to the transfer of title, of the name of
the grantee and, subject to EPA approval, what specific
requirements of the consent decree will be performed by the
grantee.
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3. The grantor may be required Co include
notification in the conveyance (deed) that the property is
subject to the terms of the consent decree, and may also be
required to describe in the conveyance the prior use of the
site, (e.g., use as a hazardous waste disposal facility).
The major concern in fashioning any type of language is to
allow for free alienation. Language such as the following
should achieve our objectives:
Within thirty days of approval by the Court
of this Decree, defendant shall record a
copy of this Decree with" the Recorder's
Office, County, State
of .
The site as described herein may be freely
alienated provided that at least sixty days
prior to the date of such alienation defendant
notifies plaintiff of such proposed alienation,
the name of the grantee, and a description of
defendant's obligations, if any, to be performed
by such grantee. In the event: of such alienation,
all of defendant's obligations pursuant to this
Decree' shall continue to be met by Defendant or,
subject to EPA approval,'by the grantee.
Any deed, title or other instrument or conveyance
shall contain a notice that the site is the
subject of this Decree, setting forth the style
of the case, case number, and Court having
jurisdiction herein.
These provisions, of course, are only applicable to sites
where the landowner is a named defendant. In cases involving
non-landowner defendants, the government may wish to specify in
the decree that sale of the site has no effect on the obligations
of such defendants.
VII. Priority of Claims Versus Non-Settling Parties
When a case is settled for less than the total amount
necessary to complete a response action or to reimburse
plaintiff fully for costs incurred, it may be done so with the
anticipation that the non-settling parties will be available
-to reimburse the Agency for the remaining balance and/or
complete the response action. To ensure that sufficient funds
are available 'or to avoid delay in collecting on any judgments
as to non-settling parties, a provision may be included in the
consent decree providing that an Agency judgment obtained
against non-settling parties takes priority over that obtained
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by any of the settling parties. Sample priority of claims
language is as follows:
Defendant's claim against any other responsible
party in this or any other proceeding for
contribution or indemnification of all or a
portion of the cost of its settlement herein
shall be secondary to the United States'
claim against such other responsible party
as to any remaining balance for the response
actions or other costs incurred for action
taken at the Site.
VIII. Preclusion of Claims Against the Fund
Section 112 of CERCLA provides a procedure whereby a
private party which has performed a CERCLA cleanup may assert
claims to recover such costs from the Fund assuming the party
has received "preauthorization" pursuant to the National
Contingency Plan. See 40 CFR § 300.25(d). .The-right to
recover such claims is subrogated to the United States by the
payment of such a claim.
In multiple party consent decrees, it is important to
include a provision prohibiting future claims against.the Fund
by the responsible parties, unless the responsible parties
are explicitly preauthorized to bring a claim as part, of the
settlement.^/ Such a provision is particularly important' in
cases where defendants may later allege that the percentage
of the total remedial costs that they contributed to the settle-
ment is disproportionate to the extent that they contributed
to the problem at the site.
The language should be extremely broad and unequivocal..
An example of such a provision is provided below:
In consideration of the entry of this Consent
Decree, defendants agree not to make any claims
pursuant to Section 112 of CERCLA, 42 U.S.C.
Section 9612, or any other provision of law .
directly or indirectly against the Hazardous
Substance Response Trust Fund established by
CERCLA or other claims against the United States
V As EPA policy on the issue of combining private party
cleanup with Fund expenditures evolves, there may arise
situations where a claim against the Fund would be permissible'.
The language above should be followed pending further guidance
on circumstances where exceptions might be permitted. In addition,
statutory amendments to CERCLA that would obviate the need for
this provision are currently under consideration by Congress.
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for expenses related to this case and this
Consent Decree. Nothing in this Consent Decree
shall be deemed to constitute preauthorization
of a CERCLA claim within the meaning of 40 CFR
§ 300.25(d).
Consent decrees with similar provisions include the Petro
Processors, Bluff Road, Chem-Dyne, and Seymour decrees. In
cases involving just one responsible party, such a provision
should also be included since there is always some doubt
concerning whether there may be other, perhaps unknown at the
time, responsible parties.
This provision should be relatively non-controversial
because any defendant willing to enter a consent decree
presumably is willing to pay the portion of- the cleanup
specified in the decree.
IX. Joint Responsibility Among Responsible Parties for
Implementing the Decree
The Agency has consis ten-t ly interpreted CERCLA as
authorizing imposition of joint and several .liability on all
responsible parties. The predominant case law accepts that
interpretation. It- is important to .preserve this principle in
multiple defendant cases. Also, from a practical point of
view, it is necessary to have the consent decree recognize
joint responsibility in order to prevent the insolvency or
other problems of one defendant from delaying the entire
cleanup.
In order to provide assurance that cleanup will proceed
on schedule, consent decrees should include a joint responsi-
bility provision, such as the example set forth below:
The Industry Defendants shall implement the
remedial actions for both sites as provided
in this Decree, in accordance with the
schedules established in the various plans
and in this Decree.
In the event of the insolvency or other
inability of any one or more Industry
Defendants to implement the activities
required by this Decree, the remaining
Industry Defendants agree to complete all
such activities and actions required by
this Decree.
If there is only one responsible party, then particular.
care must be taken in drafting the Guarantee, Performance/
Completion Bond or Financial Responsibility provisions, to
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provide assurance chac there will be adequate resources to
complete implementation of the remedial measures.
X. Public Access to Documents
Many consent decrees require an elaborate investigation
and study phase, similar to a CERCLA RI/FS, -before some or all
of the final remedial actions are determined. In all cases,
many engineering details, protocols, and specifications are not
determined until the consent decree is implemented. Substantial
amounts of technical information and detail will be determined
during the implementation of the consent decree under EPA1s
oversight.
The public is often intensely interested in the progress
of such remedial actions. When EPA is performing the remedial
action pursuant to CERCLA, the Agency makes information and
draft proposals available through a community relations plan.
It is EPA policy to implement at all sites, regardless
of whether the cleanup is performed by the government or the
responsible party, a community relations plan which encourages
public participation in the cleanup process. This policy,
however, must be balanced against the need for confidentiality
in enforcement actions. Since the implementation of a consent.
decree may give rise to disputes- with the responsible party
which end up before the court, implementation of the consent
decree is still litigation-related.
In general, consent decrees should contain provisions
that explicitly require that all technical data and factual
information generated and submitted by the defendant are
available for public inspection unless they are requested to
be made confidential by the defendant pursuant to EPA regulations
(see 40 C.F.R. Part 2). Where possible, specific and general
categories of data and information that the defendant must
make public should be specified. Because of the need to protect
open and frank interagency communication, this provision should
not apply to Agency information or documents. However, raw
technical data generated by EPA or the State, if applicable,
should be made, public nonetheless after all applicable quality
assurance/quality control protocols have been complied with.
After a consent decree is'signed, EPA and the defendants
may nonetheless continue negotiations over matters left
unresolved by the decree, (e.g. , remedial proposals which must
await completion of additional sampling and analysis). In some
cases, EPA and the defendants might be urged to make public
all draft remedial proposals leading up to settlement. To
avoid this unproductive and impractical procedure, EPA should
include explicit language in the consent decree exempting
negotiation documents from the public disclosure provision.
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Also, EPA should consider, clearly articulating from the outset
of the community relations program that "negotiation" documents
are not official submissions within the meaning of the consent
decree clause.
An example.of such a provision is provided below.
All data, factual information, and documents
submitted by the Defendant to EPA and the
State pursuant to this Consent Decree shall
be subject to public inspection unless
identified as conridential by Defendant
in conformance with 40 C.F.R. Part 2 or
applicable State law or otherwise exempted
by the terms of this Consent Decree. The data,
factual information and documents so identified
as confidential will be disclosed only in
accordance with EPA regulations or applicable
State law. The Defendant shall not assert
confidentiality regarding any hydrogeological
or chemical data, data submitted in support
of a remedial proposal or any other
scientific or engineering tests or data.
This provision does not "apply to documents
exchanged by the parties relating to issues
of liability or the determination what-additional
remedies, if any, other than those specifically
required by the terms of this Decree, may be
necessary to remedy conditions at the site.
XI. Dispute Resolution Provisions
Hazardous waste consent decrees may require one or
several parties to take samples, perform studies, and implement
other remedial steps about which there may arise differences
of. opinion whether the obligation was satisfied. Such
differences of opinion may also arise over whether or not a
force roajeure event has occurred, or whether the defendant has
incurred liability ta pay stipulated penalties under the decree,
As noted in the general guidance on consent decrees, it. is
useful for the decree to specify a mechanism or-mechanisms to
resolve such disputes.
Such mechanisms may include negotiations among the parties
as well as judicial resolution. The sample language below
provides for both, although the parties would probably discuss
the issue and engage in limited negotiations even if the decree
did not expressly mention such a mechanism.
Particularly where the dispute concerns the implementation
of remedial work, it is important to resolve it quickly. Some
disputes may be more quickly resolved by discussion and
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negotiation among the parties rather than a judicial hearing;
however, it is important not to allow negotiations to consume
too much time. Therefore, the government should not hesitate
to seek judicial resolution of disputes which the parties
cannot readily resolve among themselves.
Where possible, it is helpful to minimize the drain on
Agency resources by placing on the defendant the burden to
demonstrate that its proposal is most consistent with the
purposes of the decree. An acceptable sample provision follows
DISPUTE RESOLUTION
The parties recognize that a
dispute may arise among defendant, EPA
and the State regarding plans, proposals
or implementation schedules required to be
submitted by defendant pursuant to the terms
and provisions of this Consent Decree, o.r
regarding whether a force maj eure event, as
defined in paragraph of this Decree,
has occurred, or whether defendants have
incurred liability to pay stipulated penalties
under paragraph . If such a dispute arises,
the parties will endeavor to settle it by gooa
faith negotiations among themselves. If the
parties cannot resolve the issue within a
reasonable time, not to exceed thirty calendar
days, then any party may file a petition with the
Court setting forth the matter in dispute.
The filing of a petition asking the court
to resolve a dispute shall not extend or
postpone defendant's obligations under this
decree with respect to the disputed issue.
In the event of a dispute between
defendant and EPA or the State, defendant
shall have the burden of: (1) showing that
its proposal is more appropriate than the
proposal of EPA or the State to fulfill the
terms, conditions, requirements and goals
of this Decree, and (2) demonstrating that
its proposal is consistent with the National
Contingency Plan; will abate'hazards at the
site; and will protect public health, welfare,
and the environment from the release or
threat of release of hazardous substances at
the site. If the dispute concerns an issue
of science, technology, or public policy
. within the areas of EPA's expertise, the
Court shall adopt the position (if any)
proposed by EPA, unless the Court finds that
position to be arbitrary and capricious.
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XII. Stipulated Penalties
Hazardous waste decrees which establish obligations for
defendants to complete in.the future should contain stipulated
penalty provisions to assure' that the defendant will comply
with its obligations and to minimize disputes over the
appropriate sanction for failures to comply. Such obligations
will typically include the implementation of remedial work
(including construction requirements), and reporting and
monitoring requirements.
The purpose of a stipulated penalty clause is to d.eter
potential violations of the decree-by associating with each
violation the immediate obligation to pay a large enough
penalty to make compliance more attractive than violation. .
However, even payment of a stipulated penalty should not
deprive the government (or the court) of other remedies,
including injunctive relief, and every stipulated penalty
provision should contain a clause to this effect. Stipulated
penalties should never be considered as setting a maximum
penalty exposure, subject to negotiation downward.
The authority of the district court to impose monetary '
penalties or fines, for prospective violations of consent.
decrees flows-'not .only from the civil penalty, authorities of
the environmental statutes (e.g., RCRA §§ 3'008, 7'003(b);
CERCLA § 106(b)), but also from the court's civil contempt
powerits independent statutory authority to punish violation
of its lawful orders by fine or imprisonment. 18 U.S.C.
§ 401. When fines under § 401 are prospective, applying only
to future violations, they are considered "coercive," intended
to give the defendant an incentive to comply with the court's
order. Prospective fines under § 401 are not subject to the
monetary limits in the penalty provisions of other statutes.
Stipulated penalties should be large enough to provide a
real incentive to the defendant to fulfill its obligations on
time, considering the financial strength of the defendant, any
economic saving from delaying compliance, and any harm or risk
of harm to public health or .the environment from delaying
compliance. (See Perfect Fit Industries, Inc. v. Acme Quilting
Co. , Inc., 673 F.2d 53 (2d Cir. 1982), certT"denied 103 S.Ct. 73-
At the same time, the magnitude of stipulated penalties should
not be so great that the defendant prefers to allow the govern-
ment to perform remedial work with Superfund money, rather
than perform work itself.
Depending on the facts of the case, it may be appropriate
to: a) specify all numbered paragraphs the violation of which
will be penalized; b) establish a schedule of per diem penalties
which increases with the duration or extent of the violation;
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or c) establish higher penalty amounts for more important
violations.
Stipulated penalties may be divided between the United
States and a State as co-plaintiffs, provided that: (1) the
State has taken an active part in the litigation, including
the seeking of stipulated penalties, and (2) State law..provides
independent authority for the State to obtain civil penalties.
The following sample language demonstrates escalated
stipulated penalties, and a division of stipulated penalties
between the United States and a State.
. STIPULATED PENALTIES
(A) Unless excused by the provisions
of paragraph [force majeure clause], the
Defendant shall pay the following stipulated
penalties for any failure to comply with
time requirements of this Consent Decree,
including any implementation schedules
submitted by Defendant and approved by
EPA/State or this Court:
Period of Failure to Comply Penalty Per Violation Per Day
1st through 14th day $1,500
15th through 44th day ' $5,000
45th day and beyond $10,000
(B) .Stipulated penalties under this paragraph
shall be paid by two certified checks of equal
amounts with one-half of the daily penalty payable
to the "Treasurer of the the United States" and
the other one-half payable to the "Arkansas
Department of Pollution Control and Ecology."
(C) The stipulated penalties set forth above
shall be in addition to any other remedies or
sanctions which may be available to EPA/State by
reason of Defendant's failure to comply with the
requirements of this Consent Decree.
(D) If the parties disagree whether
Defendant has violated a provision of this decree
for which a stipulated penalty is due, the
Defendant may petition the Court under [dispute
resolution paragraph]. Defendant must file any
such petition within 30 days of receiving written
demand for payment from the Plaintiff.
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XIII. Adinissibility of Data
In order Co avoid disputes over the integrity of sample
results or other data in the event that the parties disagree
over how to implement the consent decree, the decree should
provide that verified data is admissible in evidence.
A model clause is:
The Defendants waive any evidentiary
.objection to the admissibility into evidence
of data gathered, generated, or evaluated
pursuant to this decree that has been verified
by the quality control/quality assurance
procedures contained in part . However,
a Defendant may object to a speciric item
of evidence if the objecting party demon-
strates that such item of evidence was noc
gathered or generated in accordance with che
sampling and analytical procedures estab-
lished pursuant to the .site Work Plan.
The Decree should provide that EPA must approve sampling
and analytical procedures. Additionally, it is necessary for
there t'o be a careful overs igh-t-progra;n.
DISCLAIMER
The policies and procedures established in this document
are intended solely for the guidance of government personnel.
They are not intended and cannot be relied upon to create any
rights, substantive or procedural, enforceable by any party in
litigation wit.r the United States. The Agency reserves the
right to act at variance with these policies and procedures and
to change them at any time without public notice.
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