&EPA
United Slates
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
DIRECTIVE NUMBER: 9610.10
TITLE: Cost Recovery Policy for the Leaking
Underground Storage Tank Trust Fund
APPROVAL DATE:
EFFECTIVE DATE:
October 7, 1988
October 7, 1988
ORIGINATING OFFICE: office of Underground
QB FINAL Stora8e Tanks
D DRAFT
STATUS:
REFERENCE (other documents):
Supplemental Guidelines for FY89 LUST Trust Fund
Cooperative Agreements; OSWER Directive 9650.7:
April 7, 1988.
OSWER OSWER OSWER
F DIRECTIVE DIRECTIVE D
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^^^^ United States environmental Protection Agency
SLCRA Washington DC 20460
«ycr**\ OSWER Directive Initiation Request
2. Ortqlnator Information
Name of Contact Person
David Hamnett
Mail Code
OS-410
Office
OUST
1. Directive Number
9610.10
Telephone Code
475-9377
Cost Recovery Policy for the Leaking Underground Storage Tank Trust Fund
4 Summary of Directive (include bnel statement of purpose)
This Directive is the first full statement for States and EPA Regional Offices of the
policies, priorities, and procedures for cost recovery under the LUST Trust Fund.
Special conditions that will incorporate the policy into Trust Fund cooperative
agreements are included.
5. Keywords
Cost Recovery, LUST Trust Fund. Underground Storage Tanks. Cooperative Agreempnt-g,
6a. Does This Directive Supers .e Previous Oirecuveis)' "
JXJI No | j Yes What directive (number, title)
b. Does It Supplement Previous Directive^)1
No
Yes What directive (number, title) 9650.7;
Supplemental Guidelines for FY 89 LUST Trust Fund Cooperative Agreements (Replaces Cost
7 Draft Level
[ | A - Signed by AA/OAA
I X j B - Signed by Office Director
.-Recovery Sectio
C - For Review & Comment 0 - In Development
8. Document to be distributed to States by Headquarters? | |Yn
No
This Request Meets OSWER Directives System Format Standards.
9. Signature ot Lead Office Directives Coorainaicr
^-i/t-fc-i-J^ ~~£**t*-*-^
Beverly Thomac
10. Name ana Title of Approving Official
"N r\.-^^.. ». • v- X.-- - ' -
Sharon Foote, OSVER Directives Officer
0.,.
V'HSS
Date
\o -1- *l
EPA Form 1315-17 (Rev. 5-87) Previous editions are oosoiete
OSWER OSWER OSWER O
VE DIRECTIVE DIRECTIVE DIRECTIVE
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OSWER Directive 9610.10
\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
OCI "' OFFICE OF
SOLID WASTE AND EMERGENCY RESPONS
SUBJECT: LUST Trust Fund Cost Recovery Policy and Special
Conditions
FROM: J. tftni^on 4o'rter
Assistant Administrator
TO: Regional Administrators
Regions I-X
ATTN: Waste Management Division Directors.
Regions I-III, V-IX
Water Management Division Directors, Regions IV, X
Attached is the final Cost Recovery Policy for the Leaking
Underground Storage Tank (LUST) Trust Fund. Also attached is a
set of special conditions for LUST Trust Fund cooperative
agreements that reflect the policy. Both are products of an
intensive effort to develop a framework for cost recovery that
incorporates the State-centered design of the Underground Storage
Tank program.
The Office of Solid Waste and Emergency Response worked
closely with the Office of General Counlel, the Of fice of Se
Comptroller, the Regional UST programs and other Headquarters
offices over the last year to develop this innovative policy.
These offices were also instrumental in helping us obtain
?SSS?rrevCes on our aPProach from the Department of Justice
(DOJ) / the Office of Management and Budget, and Congressional
staff .
«,. ^ Tne.two a°st innovative aspects of the policy should provide
states with the autonomy and incentive to pursue recoveries
aggressively and efficiently. First, to streamline the recovery
process, States will generally be able to litigate and settle
cost recovery claims without the involvement of EPA or DOJ.
Second, to provide incentives for pursuing cost recovery, States
Wii* ?etain recovered Trust Fund expenditures to perform
additional cleanups or to satisfy their cost share requirements.
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OSWER Directive 9610.10
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This policy replaces the cost recovery section (Section
II.I) Of OSWER Directive 9650.7 (Supplemental CuideHno* *»,. PV
89 LUST Trust Fund Cooperative Agreementsl. dated April 7, 1988.
This policy will also be incorporated into a set of consolidated
LUST Trust Fund Guidelines that will be released in the next few
weeks.
To encourage States to proceed with recoveries on cleanups
now underway, Regions should amend all existing LUST Trust Fund
cooperative agreements to include the attached special
conditions. This will also eliminate inconsistencies in
recordkeeping and recovery procedures that would otherwise make
oversight of the program unnecessarily complex.
I am certain that this policy will help us continue to build
strong State underground storage tank programs. I want to
congratulate everyone who contributed to the development of the
policy.
Attachments
cc: Charlie Grizzle
Larry Jensen
Dave Ryan
Harvey Pippen
Tony Musick
Ron Bachand
Howard Corcoran
Louise Wise
Regional UST Program Managers
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OSWER Directive 9610.10
COST RECOVERY POLICY FOR THE LEAKING UNDERGROUND
STORAGE TANK TRUST FUND
A. Overview
This is EPA's first complete statement of its policies on
cost recovery under the Leaking Underground Storage Tank (LUST)
Trust Fund. It has required a year of coordinated effort by
various EPA offices to develop and to secure necessary approvals
within the Agency and from other agencies and officials in the
executive and legislative branches of government. Working with
and through States to implement this policy, EPA expects that it
will help cost recovery to become a practical and effective tool
that states will use to both stimulate and fund more cleanups of
releases from underground storage tanks.
Objectives of Cost Recovery
The primary purpose of cost recovery under the LUST Trust
Fund is to provide incentives for owners and operators to comply
with technical and financial responsibility requirements, and
most importantly to clean up releases from their own tanks. EPA
expects that State-lead cleanups followed by cost recovery will
continue to occur in a minority of cases, because the majority of
cleanups are conducted by owners and operators. When cost
recovery is necessary, it will generate income for additional
cleanups.
Cost recovery as practiced under the LUST Trust Fund will
depart significantly from the approaches taken in other Federal
environmental response programs. Consistent with the State-
centered design of the underground storage tank program, States
will implement the cost recovery program, have considerable
discretion in operating it, and benefit directly from their
successful recoveries.
The two most innovative aspects of EPA's cost recovery
policy for the LUST Trust Fund should provide States with the
autonomy and the incentive necessary to pursue recoveries
aggressively and efficiently. First, States with cooperative
agreements will litigate and settle recovery claims without the
routine involvement or concurrence of EPA or the Department of
Justice. Second, states may retain any Trust Fund monies they
recover for use on additional Fund-eligible cleanups and
activities.
Legal Rationale
The legal rationale behind this approach was developed by
the Agency in consultation with the Department of Justice.
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OSWER Directive 9610.10
Under 28 U.S.C. Section 516, the Department of Justice
(DOJ) must conduct any litigation in which the United States has
an interest unless there is an exception authorized by law. EPA
interprets section 9003(h) of Subtitle I to be such an exception,
allowing States under cooperative agreements that have the
capabilities to carry out effective corrective actions and
enforcement activities to exercise various program authorities.
including the cost recovery authority provided in section
9003(h)(6). These States may also settle cost recovery litigation
as part of the exercise of enforcement discretion conveyed by
section 9003(h).
Additionally, EPA interprets section 9003(h) to provide
authority for States to administratively settle cost recovery
claims. EPA believes that this authority includes the ability to
compromise or terminate Trust Fund claims based on considerations
of equity as described in section 9003(h)(6)(B) (e.g., reducing
the claim to the amount of required financial responsibility).
Finally, EPA has determined that, consistent with the
"program income" concept described in OMB Circular A-102, that
States may retain recovered Trust Fund monies to perform
additional eligible activities under their cooperative
agreements. Thus, appropriate requirements in 40 C.F.R. Parts 30
and 31 on the documentation and use of program income apply to
recoveries of Trust Fund money.
Recovery Procedures
Variations in State recovery procedures can be expected,
but generally States will be responsible for all of the following
activities in cases that they deem to be high priorities:
o Determination of a release
o Notification of responsibility to the owner or
operator
o Negotiation for corrective action (in non-emergency
situations)
o Cleanup (if the owner or operator is incapable or
unwilling to clean up)
o Demand for payment
o Negotiation for a settlement of the recovery claim
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OSWER Directive 9610.10
o Litigation (when demand for payment and efforts to
reach an administrative settlement fail)
o Collection and case closure
States are encouraged to tailor the specifics of these
procedures to suit their individual programs and to save proaram
resources. In addition, the detailed policy guidance that
follows has been developed to help ensure that cost recovery
resources are used efficiently and stimulate compliance by owners
and operators.
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OSWER Directive 9610.10
B. State and Federal Roles in Cost Recovery
Policy
Under their cooperative agreements, States are responsible
for all legal, programmatic, and administrative activities
necessary to recover their expenditures from the LUST Trust Fund.
This includes undertaking administrative and judicial recovery
actions and settling claims. They are responsible for required
reporting and recordkeeping including documenting that their
Trust Fund recoveries are used for additional eligible
activities under their cooperative agreements. EPA will provide
general policy guidelines to States and make funding available
5Sf re??very Programs through the States' cooperative agreements.
EPA will also assess the performance of State cost recovery
programs and provide support and assistance to States where they
are needed to improve performance. The Agency will generally be
bound by settlements and judgments reached in States, but
reserves the right to pursue recoveries independently in the
extreme case. Also, EPA may pursue recoveries in those rare
cases where the Agency has performed a federal-lead response.
Guidance
States are expected to have adequate legal authorities to
undertake cost recovery either by having or acquiring their own
authorities, or certifying that they are able to use federal
authorities, states with their own recovery authorities should
also cite Subtitle I in their recovery actions (i.e., demand
letters, administrative orders, and judicial complaints) to
establish the liability of owners/operators to the federal
government for Trust Fund expenditures.
EPA is currently formulating policies on a number of issues
related to recovery litigation. One major unresolved issue is
whether States should bring judicial recovery actions in State 01
federal courts. Until these issues are resolved, States should
within one week, notify EPA's Office of Regional Counsel when
filing judicial recovery actions for sites where they have used
Trust Fund money for cleanup or enforcement. This will give EPA
the opportunity to consult with the State, determine whether the
action might affect the scope of the Agency's Subtitle I
authorities, and if necessary, provide technical or legal
assistance to the State. However, EPA will not require States to
delay recovery litigation while the Agency reviews complaints
submitted by States.
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OSWER Directive 9610.10
States must maintain accounting and recordkeeping systems
that will document all Trust Fund expenditures, support cost
recovery with site-specific records, and demonstrate that
recovered funds are retained and used for additional eligible
activities or as matching funds under their cooperative
agreements, state recordkeeping and accounting must conform to
requirements in these guidelines and in the forthcoming LOST
Trust Fund State Financial Management Handbook, when it becomes
available.
States will have considerable discretion in prioritizing
cases for cost recovery and determining an appropriate level of
effort to devote to each case. At a minimum, in each case states
should make reasonable efforts to contact owners and operators
who are liable for releases, notify them of their liability for
enforcement and corrective action costs, and demand payment. In
those rare cases where equitable factors support compromise or
termination-1- of the Trust Fund claim, States should ensure that
the bases for any compromise or termination are adequately
supported in the records of the State and reflect the efficient
use of Trust Fund resources, states may compromise Trust Fund
claims when, for example, an owner/ operator demonstrates that
do{™
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OSWER Directive 9610.10
Even where no administrative or judicial settlement is
reached, States must formally close out all cases and document
the reasons for deciding not to proceed further. Factors
justifying case closure include the situations where costs of
pursuing a case further will approach or exceed the potential
recovery, bankruptcy of the owner/operator, and other reasons.
States should not allow the statute of limitation (SOL) to run
and justify closure solely on that basis. States should
generally pursue cases promptly and file actions in a timely
manner to enhance the chances for recovery. States should revise
annrf ^"^i?? I? individual recovery cases as SOL dSdlSE
approach. Until the issue is resolved by the courts, states
relying solely on Subtitle I cost recovery authorities should be
8S rV?!! Sr2S:ew a?sumin9 a three year limit applies, despite
the fact that EPA believes that a six year limit is applicable.
This is necessary because some courts have applied the three year
limit to similar cases.
When States make successful recoveries at sites where Trust
Fund monies were used, they may retain the Trust Fund share as
program income consistent with OMB Circular A-102 and 40 CFR
Parts 30.525 and 31.25. This means that States may use
recovered federal Trust Fund monies for additional Fund-eligible
cleanups and activities under their agreements. When State!
2S22L 2/S so, they must inform EPA,, and keep._appropriate
fSSS m °£ how the recoveries were used. States may also use
LUST Trust Fund recoveries to meet their cost share requirement
under section 9003(h)(7)(B). if a state elects to do this? it
must be specified in their cooperative agreement, in
«h?n?Ja5lng1their c?°Perative agreements, States and Regions
should develop contingency plans that will allow States to
obligate their recoveries efficiently, states should calculate
the federal Trust Fund share of their recoveries on a site-by-
?i™' P5Va?a basis> For exafflPle, if a State spends 50
S£S! ^* idfS °f LUST Trust Fund noney at a 8ite, and the
»«a!v »«Jma£ei£ recovers 50 Percent of all Federal and State
money used at the site, it must redirect 25 thousand dollars of
"program income" into Fund-eligible activities.
EPA expects States with cooperative agreements to
adequately fund and staff recovery efforts to deal with
anticipated case loads. Cost recovery activities are allowable
costs under Subtitle I. Where the recovery program is dependent
on the Attorney General's Office, the State should consider the
need for formal funding arrangements (e.g., a memorandum of
agreement) to ensure legal staffing for cost recovery referrals.
When the Trust Fund is not used to pay for such legal staffing,
States may wish to investigate the possibility of counting these
legal services as "in-kind contributions" toward satisfying their
match requirements under 40 C.F.R. Part 31.24.
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OSWER Directive 9610.10
EPA's principal responsibilities in cost recovery are to
provide funding, policy, guidance, oversight, and assistance to
States. The Agency's operational role in cost recovery will
generally be limited to pursuing recoveries in those cases where
EPA responds directly to a release, and in rare cases of
overfiling.
EPA intends to make its expectations for the activities and
performance of cost recovery programs reasonable and clear to
States in advance. This will occur through policy, guidance,
routine communications, program appraisal and reviews, and the
negotiation of cooperative agreements. The oversight and
assistance functions of EPA's program, grants, and financial
management offices will accommodate variations in State
procedures and capabilities to the maximum extent possible. The
Agency's goals will be to help build State capabilities,
particularly in developing recovery programs and to improve
performance. At present, EPA has no numerical expectations for
the performance of State recovery programs. Early in the
recovery program it will focus on States' progress toward
putting basic systems, policies, and procedures in place that
will enable them to recover Trust Fund expenditures efficiently
and effectively.
EPA is working with several States on pilot projects to
develop realistic expectations for program performance, and to
identify effective recovery procedures. The results will help
EPA support State programs with tools and guidance. They will
also help the Agency formulate and communicate more precise
expectations for program performance.
Generally, EPA will be bound by States' judicial actions and
settlements. However if EPA finds that a State is not
effectively implementing cost recoveries, the Agency will offer
the State necessary assistance in correcting any problems. The
Office of Underground Storage Tanks will be most interested in
seeing that States have adequate accounting and recordkeeping
systems in place and that States identify, develop, and pursue
appropriate recovery cases in a timely and sound manner. If
problems in these or other areas persist, the Agency may take
appropriate action under regulations governing cooperative
agreements. In extreme cases, EPA may consider filing a recovery
action against the owner/operator even though the State has the
authority to initiate an action or has already done so.
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OSWER Directive 9610.10
C. Recoverable Costs
Policy
Owners and operators are liable for all costs of corrective
action and enforcement, including interest, indirect and
"management and support" costs associated with these activities
that are paid for by the Trust Fund. States are not required to
pursue Trust Fund expenditures for program management costs
incurred by the U.S. E.P.A.
States will assess and may collect interest on Trust Fund
expenditures used for corrective action and enforcement.
Interest charges should provide incentives for responsible
parties to settle cost recovery claims. Procedures for assessing
interest charges are described separately in this document.
Owners and operators are also liable for Trust Fund
expenditures made by States in overseeing responsible party
cleanups. Generally, the costs of oversight are comparatively
low and the number of cases is very large. Therefore, EPA
expects that States will exercise discretion in determining an
appropriate level of effort to devote to pursuing oversight
costs.
Guidance
In each case, States will exercise their discretion in
determining exactly which costs they will pursue. EPA is more
interested in a State's overall record in cost recovery than in
retrospectively examining decisions to pursue particular costs in
hundreds or thousands of cases. Direct costs are most easily
documented and defended in litigation. However, EPA is
developing, and will soon distribute a simple procedure which
will allocate all non-site Trust Fund costs including "management
and support" costs to individual sites. Using this methodology,
States will have available to them the full cost of a particular
site cleanup at the time of the cost recovery action. To the
extent that they are legally able, States should allocate all
Trust Fund expenditures to sites for the purpose of cost
recovery. States may also develop their own systems for
allocating non-site costs and/or include additional State
overhead costs that are beyond the scope of their cooperative
agreements.
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OSWER Directive 9610.10
EPA expects that the costs of overseeing cleanups by
cooperative owners and operators will usually be a lower priority
for recovery because Fund expenditures for oversight of a typical
cleanup will be comparatively snail. In addition, States nay
wish to exercise their discretion and not pursue these costs in
cases where this will provide valuable incentives for owners and
operators to clean up releases from their tanks.
In some cases states will expend significant enforcement
resources to compel reluctant owners or operators to cleanup or
to pay cleanup costs (e.g., legal costs associated with cost
recovery, protracted negotiations, issuance of cleanup orders and
litigation). These costs are recoverable. Presenting these costs
to liable owners and operators with the direct costs of cleanup
will give States additional leverage in their attempts to reach
agreements for responsible party cleanups and recovery of costs.
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OSWER Directive 9610.10
D. Interest Charges
Policy
Owners and operators are liable for interest charges on
Trust Fund expenditures at their sites. States should assess
interest on expenditures from the Fund in the cost recovery
process. States are allowed to retain recovered interest for
additional eligible activities. ««w« ror
Guidance
Section 9003(h) of the Resource Conservation and Recovery
Act (RCRA) describes the States' role in recovering LUST Trust
Fund expenditures - but does not specifically address the
collection of interest on those expenditures. However, EPA is
entitled under the Debt Collection Act and common law authorities
to collect interest on Trust Fund expenditures. Since States
will have responsibility for recovering Trust Fund expenditures
under section 9003(h), the States will also assess and are
encouraged to pursue interest charges. Because States are
permitted to retain recoverable Fund expenditures for additional
cleanups and recoveries, they can also retain recovered interest
for use on additional eligible activities. The States'
collection of interest will deter responsible parties from
resisting payment in order to gain an interest-free loan on the
uncollected expenditures.
Before assessing interest, the State should notify the
debtor through a written notice (demand letter explaining the
agency's requirements concerning the debt and the interest).
Interest shall accrue from the date on which notice of the debt
and interest requirements is mailed or hand-delivered to the
responsible party.
The minimum recommended rate of interest that States should
assess for the current year is 6.00 percent. It is found in the
Yearly Percentage Bulletin printed every December with the rate
for the following fiscal year. The rate is equal to the average
investment rate for the Treasury tax and loan accounts. It
represents the current value of funds to the United States
Treasury, and is published by the Treasury's Financial Management
Service. EPA will notify States of the new rates each year.
EPA is examining the possibility of calculating a minimum
interest rate that more closely approximates the yield on Trust
Fund investments. The Agency will notify States if and when they
are to use this type of minimum rate.
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OSWER Directive 9610.10
A State may assess a higher rate of interest if it
reasonably determines that this is necessary to protect the
expenditures from the Trust Fund. The rate of interest as
initially assessed will remain fixed for the duration of the
indebtedness, except where a debtor has defaulted on a repayment
agreement and seeks to enter into a new agreement. New
agreements should reflect the current value of funds to the
Treasury at the time the new agreement is executed.
Interest should not be recovered if the amount due (Trust
Fund expenditures) is paid within 30 days after the date from
which the written notice was delivered to the responsible party.
However, the State may decide, on a case-by-case basis, to extend
the 30-day period for payment.
As part of their responsibility for settling claims, States
may decide not to pursue the collection of interest on a debt
entirely or in part once it has been assessed when they determine
it is in the best interest of the program. States may decide
not to pursue interest if the collection of interest puts the
responsible party in financial distress, or the cost of
collecting the interest will be more than the amount collected.
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OSWER Directive 9610.10
E. Priorities For Cost Recovery
Policy
Under their cooperative agreements States should have or
should develop systems to set priorities for cost recovery cases.
They should devote greatest efforts to cases where owners or
operators are solvent but recalcitrant, and to cases where they
fail to comply with applicable financial responsibility
requirements. Some effort should be devoted to all cases
involving Trust Fund cleanups or enforcement actions. This
means, at a minimum, a search for responsible parties (RPs) and a
demand for payment if an RP is located.
Guidance
Where the State expends Trust Fund money for corrective
action or enforcement, and "action thresholds" (see section "F")
have triggered site-specific accounting, the State will pursue
recovery of costs from responsible parties. Timely processing of
cases (and litigation where necessary) increases the chances of
successful recovery. However, the level of recovery effort that
should be devoted to any case should be based on a weighing of
the resources necessary to recover the claim against the amount
that may be recovered and the prospects for recovery. The
Zw ^ination should be based on factors such as: the solvency of
the RP, the cost of cleanup, the likelihood of recovery, the
SE?r5!!??*V£1U* °S *he Casei and the °PP°rtunity costs (resources
that could be used in pursuing other cases or in other parts of
the State•s Trust Fund program).
States will develop their own priority systems based on
these and other relevant considerations, but there are general
circumstances where cost recovery should be assigned a high
priority, low priority, or is impracticable because owners or
operators cannot be located.
High priority - Solvent RPs who refuse to comply with
corrective action orders or are otherwise recalcitrant
should be pursued aggressively, to serve as a warning
to the regulated community and to stimulate compliance
by other RPs.
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OSWER Directive 9610.10
High priority - Owners and operators who do not comply
with financial responsibility requirements should be
pursued vigorously. Although Section 9003 of RCRA
generally allows consideration of whether pursuit of
full cost recovery will significantly impair an RP's
ability to continue in business, states are precluded
by statute from considering this factor if the RP has
not complied with financial responsibility
requirements in effect at the time.
Low priority - States should generally commit fewer
resources to insolvent or financially distressed RPs,
although selective pursuit within the class should be
undertaken where the RP could afford lesser amounts,
is hiding assets, fails to cooperate, or was negligent
in allowing the release to occur. Whenever States
perform corrective actions using the Trust Fund, the
RP should, at a minimum, be sent a demand for payment.
The level of additional State effort beyond this point
should be based on an evaluation of the factors listed
above. Where cooperative owners and operators perform
cleanups, States may wish to make recovery of
oversight costs a low priority, to encourage voluntary
cleanups.
Impracticable - sites where a liable owner or operator
cannot be identified will require expenditures from
the Trust Fund for cleanup. Efforts to recover costs
expended at these sites will rarely result in recovery
of funds. However, States should make reasonable
efforts to locate a liable owner or operator before
assigning a low priority to cost recovery in these
cases.
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OSWER Directive 9610.10
F. Documentation Of Costs
Policy
States are required to document all Trust Fund expenditures
and all corrective action and enforcement costs on a site-
specific basis at each site where they have met any one of the
following "action thresholds": l) performed an emergency
response; 2) begun a detailed site investigation; or 3)
determined that an owner or operator is or is likely to be
recalcitrant.
Guidance
States must establish a financial cost accounting system
that tracks the costs of cleanup and enforcement activities on a
site-specific basis when any one of the specified "action
thresholds" is met. States are normally not required to begin
site-specific accounting until States or their contractors begin
a Trust Fund-financed, detailed site investigation or an
emergency response has begun. A detailed site investigation is
an attempt to determine the source, extent and severity of a
release. An initial site visit (e.g., to determine if a release
has-occurred) should generally not trigger site-specific
accounting because not all sites will be candidates for
significant Trust Fund expenditures and cost recovery. If an RP
is clearly recalcitrant, however, site-specific accounting
should begin as soon as costs are incurred. Generally,
contractor activity at a site will trigger site-specific
accounting.
Site-specific information needed on corrective action
activities and costs for sites where Trust Fund monies are used
includes:
Site location and description
Results of site investigations (including
identification of responsible parties)
Enforcement actions taken
Documentation of responses taken and time frames
Documentation of all costs, identifying Trust Fund
monies expended including contractor invoices
Enforcement costs include all expenditures reasonably
related to inducing a recalcitrant RP to comply and to recovering
clean-up expenditures. They include the salaries and other
expenses associated with case development, negotiations, and
litigation.
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OSWER Directive 9610.10
States should establish cost-effective accounting systems
to support recovery of Trust Fund monies in courts. Features of
cost documentation that are essential to recovering costs in
court include:
Systems that are adequate for both cost recovery purposes
(i.e., will support the State's claim in administrative or
judicial action to recover) and audit purposes. At a
minimum, the system should provide proof that the work or
purchase was authorized by the State; the work or purchase
was completed; the State was billed; and the bill was
paid.
- In many cases, States may have to respond to arguments
that the costs claimed are unreasonable and unnecessary.
The Financial Management Division of EPA's Office of the
Comptroller is developing more detailed guidance for State
accounting and recordkeeping. The LUST Trust Fund State
Financial Management Handbook will be made available by early FY
1989 to help States meet these accounting requirements.
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OSWER Directive 9610.10
Special Conditions
REQUIREMENTS FOR INCLUSION
IN LUST STATE COOPERATIVE AGREEMENTS
1. State agrees to maintain a financial cost accounting system
which meets the requirements of 40 CFR 30.510 or 40 CFR
31.20. For this and other requirements on grantees, Part
31 applies to all cooperative agreements with budget or
project periods beginning on or after October 1, 1988.
Part 31 also applies to all amendments of existing
agreements in which all of the activities in the
amendment's scope of work will be performed after October
1, 1988. Parts 30 and 33 (for procurement) apply to other
cooperative agreements and amendments.
2. State agrees to organize and maintain site-specific
information consistent with accounting thresholds and
policies described in the Supplemental Guidelines for FY
89 LUST Trust Fund Cooperative Agreements (OSWER Directive
9650.7) where Trust Fund monies are used. Prior to making
expenditures of Trust Fund monies for corrective and
enforcement actions, a system must be in place to record
these types of costs on a site-specific basis. When site-
specific accounting is required, all costs that can be
identified to a particular site should be charged
accordingly and State contractors must bill costs on a
site-specific basis for corrective action and enforcement
work performed at those sites.
3. The State acknowledges that expenditures from the LUST
Trust Fund constitute a liability of the owner/operator to
the United States. The State agrees to retain recoveries
of any LUST Trust Fund expenditures as program income, as
described in OMB Directive A-102 and 40 C.F.R. Parts
30.525(a) or 31.25(g)(2), to be used for additional
eligible Trust Fund activities. The State may also use
LUST Trust Fund recoveries to meet its cost share
requirements under RCRA Section 9003 (h)(7)(B), in
accordance with 40 CRF 31.25 (g)(3).
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OSWER Directive 9610.10
(CONTINUATION OF SPECIAL CONDITION 3 ~
INSERT 1 OR 2 BELOW)
f INSERT 1. for States which have State authority
those in RCRA Section 9003 fhl to recover response
The State therefore agrees that:
(a) It will make reasonable efforts to recover these costs,
including interest, from liable owners/operators.
States must send a copy of their complaint to EPA's
Office of Regional Counsel within one week of filing
judicial recovery actions for Trust Fund expenditures.
(b) It will report on any amounts received from the
owner/ operator as recovered costs, or agreed or
adjudged to be owed by the owner/ operator as
settlements for site clean-up, in accordance with
applicable guidance on Trust Fund Financial and
Quarterly reporting; and
(c) To the extent the State is successful in recovering
these costs, it will dedicate and use these funds for
additional Trust-Fund-eligible activities or for State
cost share requirements, and maintain appropriate
accounting of recovered funds in order to document the
reuse of recovered funds in accordance with the
requirements of 40 CFR 30.525 or 31.25, as
appropriate, and in accordance with applicable
requirements of this Cooperative Agreement.'
(d) if the State has not yet done so, the State will submit
certification of its authorities to EPA within 120 days
after the award of this Cooperative Agreement. The
certification will be signed by: (l) the State's
Attorney General, (2) someone designated by the
Attorney General to sign such documents, or (3) the
State's or Governor's General Counsel or other such
official who is responsible for advising all executive
branch agencies on the scope of their authority.
(e) It will notify EPA promptly of any reduction in its
authority to recover response expenditures (e.g.,
successful challenge to its State statutory authority) .
(INSERT 2, for States lacking State authorities consistent with
those in Section 90Q3fhl of RCRA to recover response expenditures
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OSWER Directive 9610.10
The State therefore agrees that to the extent the State lacks the
authority or procedure to recover response expenditures on
behalf of the LUST Trust Fund fi.e.. the authority to recover
such costs from owners/operators and retain such monies for
additional LUST Trust Fund corrective action and enforcement),
the state will delay taking cost recovery action until the State:
(a) Obtains legislative authority for cost recovery which is
consistent with Section 9003(h)(6) of RCRA and provides to
EPA certification of such authority from: (1) the State's
Attorney General, (2) someone designated by the Attorney
General to sign such certifications, or (3) the State's or
Governor's General Counsel, or other such official who is
responsible for advising all executive branch agencies on
the scope of their authority. This certification should be
provided by the end of the next legislative session. (The
State understands that if it has not made a good faith
effort to obtain this authority, EPA may decline to enter
into subsequent cooperative agreements.)
OR
Provides EPA with certification from the State officials
described above that State law permits it to exercise the
authorities in Sections 9003(h)(6) of RCRA. (The state
understands that if it has not provided this certification
to EPA within 120 days after the award of this Cooperative
Agreement EPA may withhold payment of LUST Trust Fund monev
consistent with 40 C.F.R. 30.902 or 31.43).
Once the State has obtained the legislative authority or made a
certification under paragraph (a) above, the State agrees that:
(i) It will make reasonable efforts to recover these costs
including interest, from liable owners/operators.
States must send a copy of their complaint to EPA's
Office of Regional Counsel within one week of filing
judicial recovery actions for Trust Fund expenditures.
(ii) It will report any amounts received from the
owner/operator as recovered costs, or agreed or
adjudged to be owed by the owner/operator as
settlements for site clean-up in accordance with
applicable guidance on Trust Fund Financial and
Quarterly Reporting; and
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OSWER Directive 9610.10
(iii) To the extent the State is successful in recovering
these costs, it will dedicate these funds for
additional Trust-Fund-eligible activities or for State
cost share requirements, and maintain appropriate
accounting of recovered funds in order to document the
reuse of recovered funds in accordance with the
requirements of 40 CFR 30.525 or 31.25, as
appropriate, and in accordance with applicable
requirements of this cooperative agreement.
(iv) It will notify EPA promptly of any reduction in its
authority to recover response expenditures (e.g.,
successful challenge to its State statutory authority).
[END OF INSERT 2]
4. State agrees to maintain supporting documentation and
appropriate records in support of any future cost
recovery efforts. The State shall adhere to the
principles of documentation and records retention
specified in the OSWER Directive 9610.10 Cost Recovery
Policy for the LUST Trust Fund (October, 1988). On
topics not addressed by these guidelines, the State
agrees to adhere to the principles of documentation' and
record retention specified in The State Suoerfund
Financial Management and Reeordkeeping Guidance until
such time as the State and EPA agree to implement the
requirements of The Leaking Underground Storage Tanks
Trust Fund State Financial Management Handbook;. The
State agrees to make these records available to the
federal government, as needed, on a case-by-case basis.
5. State agrees to provide reports as outlined in the
Supplemental Guidelines for FY 89 LUST Trust Fund
Cooperative Agreement^. (April 7, 1988). These reports
consist of Quarterly Progress Reports, Financial Status
Reports (SF 269) Federal Cash Transactions Report (SF
272), and Exception Reports.
6. State agrees to identify Letter of Credit drawdowns
under EPA's three major activity codes. The three
codes are: "7" ~ General Support and Management, «E»—
Site Cleanup Actions, and "4" — Enforcement.
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