UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUN2 1992
OSWER Directive #9834.7-1C
MEMORANDUM
SUBJECT;
FROM:
Methodology for Early De Minimia Waste Contributor
Settlements under CERCLA section iaa^)(i)(A)
Bruce M. Diamond, Director
Office of Waste Programs Enforcement
William A. White, Enforce
Office of Enforcement
t Counsel for Superfund
TO:
Waste Management Division Directors, Regions I - X
Regional Counsel, Regions I - X
This memorandum transmits to you the Agency's "Methodology
for Early De Minimia Waste Contributor Settlements under CERCLA
Section 122 (g) (1) (A) . " This guidance is a supplement to the
"Methodologies for Implementation of CERCLA Section l22(g)(l)(A)
De Minimis Waste Contributor Settlements," OSWER Directive
#9834. 7-1B (December 20, 1989).
This guidance sets forth procedures for identifying early
minim is candidate sites under Section 122(g)(l)(A) of the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA or Superfund) , as amended by the Superfund
Amendments and Reauthorization Act of 1986 (SARA) . The guidance
also provides practical assistance in developing early de minimis
settlement 'proposals and agreements.
This guidance reflects input from the Regions, Headquarters
and the Department of -Justice. We thank you for your assistance.
Attachment
cc: Superfund Branch Chiefs, waste Management Division,
Regions I - X
Superfund Branch Chiefs, Office of Regional Counsel,
Regions I - X
Received
DEC 2
Enforcement & Compliance Docket
& Information Center
Printed en Recycled Paper
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OSWER Directive #9834.7-1C
METHODOLOGY FOR EARLY Ql MIKIMI8 WASTE CONTRIBUTOR
SETTLEMENTS UNDER CERCLA SECTION 122(g)
U.S. Environmental Protection Agency
Office of Solid Waste and Emergency Response
Office of Enforcement
Washington, D.c. 20460
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OSWEH Directive #9834 . 7~1C
TABLE OF CONTENTS
I. INTRODUCTION 1
A. purpose and Scope 1
B. Background 2
II. IDENTIFICATION AND NOTIFICATION TO HEADQUARTERS
THAT A SITE 18 A CANDIDATE FOR AM EARLY DJ MINIMI8
• SETTLEMENT 2
A. PRP Waste Contributor Threshold 2
1. Waste-in Information 3
2. Waste-in Lists and volumetric Rankings
of PRPs 4
B. Response Cost Threshold 4
1. Site Contaminant Information 6
2. Similar Site Characteristics 7
C, Notification to Headquarters that a Site Is a
Candidate Site . ' 7
III, EARLY if MIMIlilS SETTLEMENT CRITERIA 9
A. Allocation of Responsibility 9
B. Identification of PRPs Eligible for the Early
De Miqj.BJg settlement 9
C. Estimating Future Response Costs for Settlement 10
1. Use of Response Cost Information from Other
Sites ' 11
2. Establishing Unit costs for Remedial
Technologies 12
IV. EARLY DB MINIMIS SETTLEMENT METHODOLOGY 12
A. Formation of the Early De MinJ.m4g Group 12
B. Negotiations 13
. C. Early DJS Minimis Settlement Document ' .13
D. Early De ftinimis Settlement Provisions 14
l. Covenants Not to Sue 14
2. Reservation of Rights 16
3. Premiums 17
4. Contribution Protection IB
5. Money Received in Settlement 18
V. PUS900I AND 981 QW THIS GUIDANCE 19
VI. FURTHER INFORMATION 19
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OSWER Directive #9834.7-ic
METHODOLOGY FOR EARLY pj MINIMI8 WASTE CONTRIBUTOR
SETTLEMENTS UNDER CERCLA SECTION 122(g)(l)(A)
I. INTRODUCTION
This guidance sets forth procedures for identifying sites
which are candidates for potential djg minim is settlements early
in the response process (for example, prior to the signature of a
Record of Decision), and provides a methodology for developing
such settlements.
This guidance supplements the "Methodologies for
Implementation of CERCLA Section l22(g)(l)(A) pja Minimis Haste
Contributor settlements," OSWER Directive #9834.7-lB
(12/20/89).1
A. Purpose and scope
The purpose of this guidance is to identify a methodology
whereby Regions may provide PRPs who are minor contributors of
hazardous-substances at' a CERCLA site ("4s minimia parties'*) the
opportunity to resolve their CERCLA liability as completely as-
possible early in the response process, without the need for
extensive negotiation. This guidance primarily addresses
potential djfe minimis settlements prior to the signature of a
Record of Decision (ROD), although the Regions may use the
methods described in this guidance to facilitate djg minings
settlements at any point in the response process.
This guidance encourages Regions to consider djj minim,,1-3
settlements with eligible potentially responsible parties (PRPs)
as early in the response process-as possible. To do so, .Regions
should compile waste contribution information for individual PRPs
as soon as it is available, and identify response costs for
settlement purposes. The guidance authorizes use of cost
information from other sites to assist in developing the future
response cost component of the settlement. The guidance also
provides criteria for evaluating when there is enough site
information to pursue an early de minimi^ settlement. In
addition, th« guidance outlines.streamlined settlement procedures
to reduce transaction costs.
1 See also "Interim Guidance on Settlements with De Minimis
Waste Contributors under Section 122(g) of SARA," OSWER Directive
#9834.7 (6/19/87) and "Interim Model C1RCLA Section 122(g)(4) fig
Minimis Waste Contributor Consent Decree and Administrative Order
on Consent," OSWER Directive #9834.7-1A (10/19/87).
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2 OSWER Directive #9834. 7-ic
B. Background
Under Section 122 (g) of CERCLA, the Agency may enter into
ninimis settlements whenever practicable and in the public
interest. There are two groups of parties which are eligible for
these settlements: de minim is waste contributors and de minim js
landowners. This guidance addresses only fle minimis waste
contributors.2
Early djg minim^g settlements allow persons who contributed
minor amounts of hazardous substances to a site, both in terms of
volume and toxicity, to resolve their liability early in the
response process. Early de minim j.s settlements also promote
efficient case management at multi-generator sites and reduce the
number of parties with which to negotiate the performance of
future response actions (e.g., remedial design/ remedial action
(RD/RA) ) . This reduces transaction costs, provides the Agency
with reimbursement of past costs, and may provide funds for
future site cleanup. Collecting such funds early in the response
process should benefit the Agency and all waste contributors
(both de minimis and non-
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3 OSWER Directive #9834.7-ic
the PRPs. This .threshold can be met by the development or
acceptance of a "waste-in" list or volumetric ranking of PRPs.
For purposes of this guidance, this threshold is met regardless
of who performs the wajste-in list or volumetric ranking of PRPs
(EPA, other federal or state agencies, or PRPs).
1. Waste-in Information
To determine individual PRP contributions of hazardous
substances sent to a site, a Region performs a PRP Search.4
Prior to and during this process, waste-in information (i.e.,
information on the type and quantity of hazardous substances sent
to a site) is acquired. This information is obtained through
different methods, including site visits, examination of records
from prior state or federal enforcement actions, or through
information gathering authorities (e.g., information request
letters, interviews, or subpoenas).5 If there has been prior
governmental action at the site such as enforcement actions,
permits or inspections, information may be available shortly
after the PRP Search commences. If the site was a landfill or a
recycling, processing or disposal facility, information such as
manifests, waste tickets, log books, billing records or canceled.
checks may be available. If available,, this information must be
organized and checked for accuracy before it can be used to
negotiate a settlement. If information request letters are the
primary means to gather waste-contributor information, waste-in
information normally will not be available until later in the PRP
Search process.
When waste-in information is available, Regions should make
reasonable efforts to compile and verify the data (e.g., through
information request letters) as 'soon as possible,6 Processing
the waste-in information as soon as it is available should
4 see "Potentially Responsible Party Search," OSWER
Directive #9834.3-1A (8/27/87); "PRP Search Supplemental Guidance
for Sites in the Superfund Remedial Program," OSWER Directive
#9834.3-2* (6/29/89).
5 There is no specific point during the PRP Search process
when waste-in information is certain to become available. Waste-
in information may never be available at certain sites (e.g.,
abandoned facilities with no facility records or groundwater-
contaminated facilities with no apparent contamination source).
In such cases, de minimis settlements are probably not feasible.
6 The Office of Waste Programs Enforcement is considering
adjustments to the PRP Search process to encourage Regions to
assemble waste-in information as early in the PRP Search process
as possible.
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4 OSWER Directive #9834.7-1C
facilitate consideration of a fle aiaiinis settlement much earlier
in the response process.
2. Waste-in Lis.ts and Volumetric Rankings of PRPs
When a Region gathers and verifies sufficient waste-in
information, it should prepare a waste-in list and volumetric
ranking of PRPs, A vaste-in list provides the volume and nature
of hazardous substances contributed by each PRP identified at a
facility. A volumetric ranking of PRPs is a ranking of PRPs on
the waste-in list in descending order by the total volume of
hazardous substances they contributed to the facility. The
Regions are encouraged to perform these activities because they
may further the statutory objectives regarding information
release under Section 122(e)(l) of CERCLA, and often increase the
opportunities for settlement.7
As soon as practicable after a verified vaste-in list and
volumetric ranking of PRPs.is available, a Region should provide
the information to all identified PRPs for review and comment.
This information can be released informally under Section
I22(e)(l) of CERCLA, with general or special notice letters to
PRPs, at PRP meetings, or through other appropriate means.
Regions may modify the waste-in list or volumetric ranking based
on the comments received concerning individual PRP 'hazardous
substance contributions.
Regions can also accept waste-in lists and volumetric
rankings developed by other interested parties (e.g., individual
PRPs, PRP steering committees, states, or other federal
agencies). Before using information from such documents, they
should be evaluated for consistency with the qualitative
standards articulated in EPA guidance. Regions should review
conversion factors (which establish one form of measurement) and
compilation assumptions, to ensure that waste-in lists and
volumetric rankings prepared by other parties are adequately
documented and not biased against certain classes or types of
PRPs. If a PRP database is used, the PRPs must be willing to
cooperate in disseminating that information to all PRPs.
B. Response Cost Threshold
The response cost threshold is met when a Region acquires
sufficient information to identify past and future response costs
7 See "Guidance on Preparing and Releasing Waste-In Lists
and Volumetric Rankings to PRPs Under CERCIA," OSWER Directive
#9835.16 (2/22/91).
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5 OSW1R Directive #9834.7-ic
for settlement.8 To establish past costs, a Region will
commonly rely on existing documentation.9 To identify future
response costs, it is necessary to estimate these costs, since
future response actions (e.g., remedial design/remedial action,
operation and maintenance, and oversight costs) are commonly not
identified at the time of the early de minimis settlement. The
future response cost estimate does not need to be a precise
figure; what is necessary is a reasonable calculation of the
potential future response costs for purposes of settlement only.
To reach the future response cost threshold, a Region should
generally have two pieces of related information;
1) sufficient site contaminant information to identify
possible future response activities; and
2} knowledge of other sites with similar site
characteristics where remedy cost information is
available.
Site contaminant information provides baseline data about the
potential djs minimi? settlement site. This information, used in *
conjunction with cost information from other similar sites,
provides a means to develop future cost estimates.' This is
important because detailed site-specific cost information is
commonly unavailable very early in the response process.
Where the waste contribution threshold is met at a point
later in the response process (e.g., during the feasibility
study) site-specific information alone may be sufficient to reach
the response cost threshold. In that situation, cost information
is more likely to be available to estimate future response costs
for the potential de minimis settlement site and it is not
necessary to evaluate cost information from other sites to reach
the response cost threshold.
A Region does not have to actually estimate the future
response costs before a site becomes a candidate site; actual
* Most de m^nimis settlements address the liability of PRPs
for both paat and future response costs under Sections 106 and
107 of CERCLA. A Region could entertain offers to settle for
only past costs* However, under that circumstance PRPs would not
receive a covenant not to sue for future costs. $qe Section
IV.o.l. of this guidance for further discussion of covenants not
to sue. Settlements for only past costs may be more •
appropriately resolved under the settlement authority in section
122(h) of CERCLA.
9 'See "Procedures for Documenting Costs for CERCLA Section
107 Actions," OSW1R Directive #9832.0-la (1/30/85).
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6 OSWER Directive #9834.7-lC
cost estimates are only necessary when negotiating the early fle
minings settlement. However, the Region should have the
necessary information to make that estimate before the threshold
is net.
1. site Contaminant Information
Site contaminant information may be available from present
or past sampling efforts, previous response actions, or records
of past site operational history (including PRP waste
contributions). This information assists in identifying the
nature of contaminants, contaminated media, and approximate
volume of contamination at the site. Regions can then identify,
for settlement purposes, the possible future response actions
which may be necessary at the site.
Significant site sampling data is typically available prior
to the signature of a Record of Decision (ROD). A Region will
often conduct site visits and take samples (soil and groundwater)
to identify contaminants and contaminant pathways. If there is a
remedial investigation/feasibility study (RI/FS) being performed
at the site, additional site data is often collected. .
Another factor to consider is whether there have been
previous removal or remedial (operable units) actions at the
site. Removal actions often include activities such as the
removal and disposal of materials or stabilizing the site to
prevent further contamination. These efforts may help quantify
the volume of site contamination. Estimating future response
costs for an early de minimis settlement may also be easier at a
site where there was a prior remedial action and the only future
response action to be determined is, for example, the appropriate
ground water remedy. It could be easier to^estimate costs for
one contaminated medium rather than multiple contaminated media
(e.g., soil, surface and groundwater). There may also be
situations where there are only a limited number of possible
'response act ions, to remedy the site contamination'; at such sites,
estimating future response costs may be easier than at a site
with a wide range, of possible remedy options.
If operational history or process engineering information is
available, it may be possible to ascertain the likely hazardous
'substances received, stored or disposed of at the site, possible
pathways of contamination, and a rough volume -of hazardous
substances currently at the site. If a state or local authority
undertook enforcement actions, additional site contaminant
information may be available. Knowledge of PRP waste-in
information may also help to identify the type and volume of
hazardous substances brought to the site. This information can
also serve to substantiate the findings concerning process
engineering and site sampling data at the site.
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OSWER Directive #9834.7-ic
2. Similar Site Characteristics
Regions should consider another factor in identifying
whether the response cost threshold is met: similarity between
the characteristics of the site where the early de ^inimis
settlement may occur and those of other sites where a remedy has
been chosen or implemented. Similar site characteristics include
similar site type (e.g., landfill or battery recycling facility),
contaminated media, site location, and nature of contamination
present at the site.
Information from other sites provides a basis from which to
estimate possible response costs at the early de minimis
settlement site, because actual cost estimates or actual cost
figures will likely be available at these other sites from the
ROD or other cost documents. At sites where the response action
is under construction or where construction is complete, actual
cost data may be available.
The Office of Waste Programs Enforcement is collecting data
to assist Regions in estimating future response costs for
settlement by using information from sites with similar
characteristics.10 In addition, the Office of Emergency and
Remedial Response is exploring whether sufficient data exists to
develop standardized or presumptive remedies for '"generic" site
types. This effort could further aid efforts to increase the
availability of future response cost data earlier in the response
process.
At sites where the Agency has never chosen a remedy
addressing similar contaminants and contaminated media, it nay be
difficult to identify potential remedy costs for settlement,
without engaging in a site-specific inquiry. If such site-
specific inquiries could be difficult, such sites may not be good
candidate sites for an early dg minimis settlement.
C. Notification to Headquarters that a Site Is a Candidate Site
Once the thresholds are met for both waste-in and response
cost information, a Region should notify Headquarters, in
writing, that the site is a candidate for an early de minimis
settlement. The notification serves to provide Headquarters with
advance notice that a Region is considering an early fle minimis
10 See Section III.C. of this guidance for an expanded
discussion on the use of cost information from other sites to
estimate future response costs.
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8 OSWER Directive #9834.7-ic
settlement. Notification also helps to assure that Headquarters
resources are available to facilitate the settlement.
This notification requirement is different from the
consultation requirement enunciated in EPA Delegation 14-14-E
(September 13, 1987, and modified by memorandum June 17, 1988),
Under that delegation, the Regional Administrator must consult
with the Assistant Administrators for the Office of Solid Waste
and Emergency Response and Office of Enforcement, prior to
entering into djt plnimji,s settlements. Regions should consider
early Headquarters involvement to assist with the settlement
(e.g., help develop estimates of future response costs) and
facilitate subsequent formal review of the proposed
settlement.11
This notification should be made to the Branch Chief,
Compliance Branch, CERCLA Enforcement Division, Office of Waste
Programs Enforcement and to the Enforcement Counsel for
Superfund, Office of Enforcement. The notification can be made
as soon as the Region identifies the site as a candidate or on a
more regular basis (e.g., quarterly).12
11 At sites where the total response costs exceed
$500,000.00, the Agency may enter into the de minimis settlement
only after obtaining prior written approval from the U.S.
Department of Justice (DOJ). See Section 122(g)(4) of CERCLA.
To facilitate DOJ review of a proposed settlement, a Region
should notify DOJ of the Region's intent to enter into
negotiations for an early de minimis settlement prior to sending
the draft settlement documents to the de, mj.ni,mis parties.
Regions should provide DOJ with the draft settlement documents
and information that has been or will be made available to the
minimis PRPs, as well as other documents which may facilitate DOJ
approval of the de minimis settlement. Where a federal PRP is
identified as a potential de minimis settlor this should be
specifically noted. Regions should also notify, in writing, the
Federal Natural Resource Trustees of the potential dje. minimis
settlement mm early as possible, thereby offering them the
opportunity to participate in the de minimis settlement in a
timely manner. If the Federal Natural Resource Trustees decide
to participate, a Region should ensure that all relevant
information is made available to them.
12 The Office of Waste Programs Enforcement is exploring
whether this notification requirement can be performed through
the CERCLIS reporting system.
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OSWER Directive #9834.7-1C
.11,1. EARLY fil MINIMI8 iETTLEMENT CRITERIA
A. Allocation of Responsibility
A Region must determine that a person qualifies for
minimis status under Section 122(g)(1)(A) of CERCLA before
pursuing a de minimis settlement. A de minimis waste contributor
is a person who contributed hazardous substances in an amount and
of such toxicity as to be minimal in comparison to other
hazardous substances at the facility. De ainimj.8 settlements may
only address a minor portion of the response costs at a site for
each settlor.
To establish which parties qualify for an early &e_ minimis
settlement, it is often necessary to develop individual
allocations of responsibility among all, the FRPs. For an early
de minimis settlement this should generally be considered an
early or draft allocation of responsibility.13 The Region
should use this allocation to determine the amount a de minimis
party must pay in the proposed settlement. The waste-in list and
volumetric ranking of PRPs is generally used as the basis for
allocating responsibility among generators and transporters. An
allocation of responsibility may also be assigned to the owners
and operators of the facility. To the extent such information is
available, factors such as viability of PRPs, presence of
bankrupt or defunct entities, or unallocable shares (i.e., orphan
shares), should be considered during the allocation process.
After completing the allocation, a Region should consider
sending the allocation document to all PRPs for review and
comment. PRPs should be able to comment on factual assumptions
made with respect to individual shares within a reasonable time
period specified by the Region.
B. Identification of PRPs Eligible for the Early Qfi Minimia
Settlement
After making allocation decisions for de minimis settlement
purposes only, a Region should determine the appropriate cutoff
for eligible de min|mis waste contributors. There is no specific
statutory criterion for identifying the appropriate cutoff other
than the requirement that the contribution of each de minimis
13 Regions may want to consult Agency, guidance for useful
information concerning developing the allocation, although it is
not necessary in an early fle minimis settlement to create a non-
binding allocation of responsibility (NEAR). Sflfl "Interim
Guidelines for Preparing Nonbinding Preliminary Allocations of
Responsibility,1* OSWER Directive #9839.1 (5/29/87).
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10 QSWER Directive #9834.7-1C
party must be minimal relative to other hazardous substance
contributors.
When a Region considers a de minimis settlement early in the
response process, PRF contributor information, both for de
minimis and non-ds minimis parties, may not be completely
available. Where this means that the precise cutoff is in some
doubt, a Region should establish the cutoff at a level which
allows only those who clearly qualify as de minimis (i.e., the
smallest waste contributors) the opportunity to settle at this
time. This limits the risk of settling with parties who are not
truly de minimis. Persons who are not eligible for an early de
minimis settlement aay be eligible for future dg minimis
settlements with the government at a later time when there is
more complete information.
Once a Region identifies the appropriate cutoff for the
early de mj,piiaia settlement, both the de minimis and non-de
minimis parties should be informed of this determination. A
Region may also choose to make available the list of parties
eligible for the early de minimia settlement and the basis for
the cutoff.14
/
c. Estimating future Response Costs for Settlement
As discussed above, early dji minjrois settlements generally
address the liability of PRPs for both past and future response
costs under Sections 106 and 107 of CERCLA. When available at
the time of settlement, a Region should use itemized cost
summaries as the basis for past costs plus applicable interest.
If an action is ongoing at the time of settlement (e.g., an
RI/FS), a Region should use both itemized cost summaries for past
work performed and an estimate of remaining costs. A-Region may
use RI/FS cost figures from the State Superfund Contract or
Cooperative Agreement with a state as the basis for estimating
these costs.
A Region should use available site and cost information to
develop a best estimate of the future response costs for the de
minimis settlement. This estimate should be based on reasonable
judgement; a precise figure is not necessary since the Region is
not selecting a remedy. This guidance does not establish a set
procedure to estimate future response costs for settlement. To
assist the Regions, two possible methods for developing future
14 The procedure used to give notice to PRPs of these
determinations will be site-specific. A Region could disseminate
this information in a number of ways, including use of the
procedures in Section 122(eHl)» at a meeting with PRPs, by mail
to all identified PRPs or through distribution of a settlement
offer.
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11 - OSWER Directive #9834. 7-1C
response cost estimates are identified below. Both of these
procedures suggest use of available cost information from other
sites to assist in estimating costs for the early de minimus
settlement. Use of information from other sites should help
facilitate development of the future cost estimate and reduce the
transaction costs in developing an estimate. These procedures
are presented as options only, and Regions may choose other
approaches, for estimating future response costs.15 Regardless
of the option employed, the methodology used should be supported
by documentation.
1. Use of Response Cost Information from Other Sites
This approach combines use of site-specific information from
the proposed de minimis settlement site, together with a review
of cost documents from other sites with similar site'
characteristics where a remedy has been selected or implemented.
Under this approach a Region would first assemble site-
specific contaminant information (i.e., nature of contaminants,
contaminated media, and volume of contaminants). Then, the
Region would review post-1986 RODs for selection of remedy at
other sites with similar characteristics.t6 If there is more
current information concerning these RODs (e.g., the remedy
selected has been implemented or is at the remedial action stage
in the response process), the Region should use that information
instead of the cost estimate in a ROD.17
The next step is to extract the relevant cost information
from similar sites. In this way the Agency could establish an
range or average of future costs from the prior remedies selected
or implemented.
After establishing the range or average of future response
costs, the Region may adjust those figures based on known site-
specific factors to establish the future response cost estimate
for the de minimis settlement. To the extent such site-specific
15 A Region can rely on cost information from the early de
site as the sole basis for estimating future costs where
sufficient site-specific cost information is available at the
time the Region contemplates the early de m|nipis settlement.
16 The Super fund Amendments and Reauthorization Act of 1986
(SARA) added Section 121 of CERCLA, setting forth criteria for
all future remedial response actions.
17 As discussed in Section II. B. 2. of this guidance, the
Office of Waste Programs Enforcement is collecting data to
facilitate use of relevant cost data from RODS or implemented
remedies.
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12 OSWER Directive #9834. 7-1C
information is not available, a Region may use the information
from similar sites alone to establish the future remedy cost
estimate for the early djg aiqimlg settlement,
2. Establishing Unit Costs for Remedial Technologies
Under this methodology, a Region could develop unit costs
for remedial technologies at sites with similar site
characteristics as the basis for estimating the site-specific
future response action costs.
This approach requires development of a list of remedial
technologies from RODs chosen or implemented for sites vith
similar characteristics (e.g., landfills, lead battery recycling
facilities) and contaminated media. Unit costs could then be
developed by matching the extent of contamination at a site with
a ROD, with the estimated remedial cost for addressing that
contaminated medium.18 For remedies under construction, the
remedial action documents commonly establish unit cost figures.
The Region would then establish a list of technologies
relevant to that contaminated medium. From this list, an average
unit cost for a particular contaminated medium could be
developed. This average unit cost figure could then be
multiplied by the amount (or extent) of contamination at the
early de mj.nj.rn is settlement site, to establish an estimate of the
future response costs for a particular contaminated medium.
A Region may also consider site-specific factors from the
early de minim is site in developing the average unit cost figure.
If, at the time of the proposed settlement site-specific studies
(e.g., the feasibility study) indicate that one or more remedial
alternatives are not viable remedial options for the early de
minimj.8 site, then the unit costs for those remedial technologies
do not have to be factored into the average unit cost figure. In
addition, if one or more remedial technologies appear to be more .
likely to be selected than others at the early de, m4ni,mi3 site, a
Region may factor in the probability of a particular remedy being
chosen into the average unit cost estimate.
IV. EARLY U MIMIMIfl SETTLEMENT METHODOLOGY
A. Formation of the Early De Miniais Group
Once a Region determines which parties are eligible for an
early de minimis settlement, it may assist in the formation of an
early de, minimis group (e.g., send out letters, hold meetings,
18 The Office of Waste Programs Enforcement is collecting
data to assist in developing unit costs for remedial
technologies.
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13 OSWER Directive #9834. 7-lC
publish notice in a local newspaper) , if to do so would
facilitate negotiations.19 If the PRPs form a de minimis group,
the Region should encourage then to take on administrative
functions (e.g., dissemination of information and review of
proposed settlement documents) . Eligible parties should be
advised that the terms of an early de pirujais settlement offer
will likely not be available in the future, although there may be
later chances to settle, but on less favorable terms.
B. Negotiations
The main objective of the early stfi mjnimlg settlement
methodology is to reduce transaction costs, conserve government
'resources, and settle with the eligible parties as expeditiously
as possible. Regions ^should adopt procedures necessary to
fulfill these objectives.
Set forth below is one suggested method to facilitate the
settlement:
o send a draft settlement document to parties identified.
as d£ minimis . take comments over a specified period of
time, and send the final settlement document
(incorporating, appropriate comments) . to all de mjlnimis
PRPs for signature.2" Comment or negotiation over
boilerplate provisions should be actively discouraged.
o Once the final settlement document is sent, the de
minimi s PRPs have a specified period (e.g., 30 days) to
sign and return the document.
o When the Region receives executed signature pages, it
should repackage the settlements into one de roinimis
settlement package for- formal review by regional
management, Headquarters, the Department of Justice and
for public comment.
C. Early De ffinjmifl Settlement Document
Under Section 122(g)(l) of CERCLA, the Agency may settle the
liability of de minirois parties either through an administrative
order on consent (AOC) or a judicial consent decree. Regions
should use the model settlement documents (AOC and judicial
19 Assisting in the formation of the de minimia group need
not wait until the estimate of future response costs for
settlement is established.'
20 It may be appropriate at a given site to send a copy of
the draft settlement .document to non-jjfi mj.nimis parties for' .
informational purposes or to seek comment.
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14 OSWER Directive #9834.7-ie
consent decree) as the basis for the proposed early dfe minj.mis
settlement.21
An AOC should be the preferred option for early flg minimis
settlements. A dji minimis settlement under an AOC can usually be
issued more quickly and with fewer resources than a settlement by
judicial consent decree, while providing similar legal effect.
Early fle m.inj.mj.3 settlements often address only the liability of
the de minimis parties; non-djg minimis pRPs will not usually be a
party to this agreement. However, a Region may choose to embody
the early dfi B^jn^mi^ agreement in a judicial consent decree
where, for example, there is current litigation involving the
Agency and de minimis parties or where non-fls mipi,ro.iq parties
agree to perform the RD/RA at the time of an early d§ mjnifflis
settlement.22
D. Early pe Minimis Settlement Provisions
In any de mipimig settlement there are several provisions in
the settlement document which affect the finality of the
settlement offered. They include covenants not to sue,
reservation of rights, premiums, and contribution protection.
Another important facet of the settlement is the distribution of
money received from the settling de minimis PRPS. These
provisions are generally discussed in earlier Agency guidance.23
Set forth below is a more detailed discussion of these provisions
as they relate to an early de minimus settlement.'
1. Covenants Not to sue
Section 122(g)(2) of CERCLA provides the Agency with the
authority to. provide covenants not' to sue in a £fi minimis
settlement, to address the liability of parties under Sections
2t See "Interim Model CERCLA Section 122(g)(4) Qfi Minimis
Waste Contributor Consent Decree and Administrative Order on
consent," OSWER Directive #9834.7-1A (10/19/87)). The Agency is
currently reviewing and updating the model documents.
22 This may occur where the non-dji mj.nj.mig parties agree to
perform the RD/RA for an operable unit with a ROD (e.g., source
control remedy), but the djg minimis component of the settlement
addresses the liability for the source control remedy as well as
other future response actions not yet chosen (e.g., groundwater
remedy).
23 see "Interim Guidance on Settlements with Ca Mjnim.is
Waste Contributors under Section 122(g) of SARA," OSWER Directive
#9834.7 (6/19/87) and "Methodologies for Implementation of CERCLA
Section 122(g)(l)(A) fie. Minimia Waste Contributor Settlements,"
OSWER Directive #9834.7-1B (12/20/89).
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15 - OSWER Directive #9834.7-1C
106 and 107 of CERCLA. These covenants indicate that the Agency
will not pursue the.dfi miniais parties in the fyture for matters
addressed in the settlement. If appropriate, a Region may
provide the settling PRPs with a covenant not to sue which is
immediately effective once the terns of the agreement are met
(e.g., payment of money). Thus, the covenant can be effective
before the future response work at the site is ever implemented.
Consistent with Agency guidance, a Region should always
include a limited re-opener to the covenant not to sue in the
early fle mjpimis settlement for false, incomplete, inaccurate, or
new information which indicates that the PRF's contribution to
the site was higher than the allocable share established for the
settlement. This re-opener is often triggered where such
information materially affects the terms of the settlement
(information which indicates the party is no longer within the de
minimis cutoff established for the settlement or information
which substantially affects the payment made by that party),24
If triggered, the re-opener should only affect that party's
settlement with the Agency and not have an effect on the
allocations of other settling de minimis parties.
Another re-opener sometimes included in d£ mijliimlff
settlements relates to potential cost overruns associated with
the future response action.25 This re-opener addresses some of
the risk of settling with de minimis parties before completion of
the future response action. Cost overrun re-openers may be
triggered when the estimated future costs increase over a set
percentage or set amount• Agency guidance states that this re-
opener is not necessary where the premium payment established is
sufficient to address the risks associated with possible cost
overruns. **
24 A Region may want to consider adding a penalty provision
in the settlement document with regard to false information
submitted by the PRP where the Agency originally relied upon that
information in identifying that party as eligible for the early
de minimif settlement. If it knowingly submitted false
information, the PRP may also be subject to criminal liability.
25 For purposes of this guidance a "cost overrun11 is
additional money that needs to be spent to implement the future
response action selected in a ROD, The term also includes the
situation where further response actions beyond that specified in
a ROD are necessary to protect human health and-the environment.
** See Page 14 of the "Methodologies for Implementation of
CERCLA Section 122(g)(l)(A) fia Minimia Waste Contributor
Settlements," OSWER Directive /9834.7-iB (12/20/89).
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16 OSWER Directive #9834.7-1C
A primary goal of the Agency in an early de minimis
settlement is to provide as much finality as possible to the de.
minimis parties. This reduces transaction costs to all parties,
and reduces the possibility that the Agency will have to pursue
the 4s njpirois parties in the future for site-related costs. To
the extent possible (taking into account site-specific concerns,
including uncertainties related to the future response cost
estimate), therefore, Regions should offer early dg m4nim4s
settlements which do not contain cost overrun re-openers. To
offset the risk involved, the Region should increase the premium
payment component of the offer.2' The result is likely to be
that the de minimis parties may pay more to settle, but .they
receive a covenant not to sue without this re-opener, and more
complete contribution protection from potential future CERCLA
liability at the site.
On 'the other hand, cost overrun re-openers can have the
advantage of reducing the premium component of the offer, and can
play an important role in structuring a settlement that reduces
risks to both EPA and the non-de. m^nimls parties. At some sites,
therefore, a cost overrun re-opener may be an important aspect of
the structure of the over-all resolution of the case, and may
also be viewed as desirable by some or all of the de miniais
parties.
To facilitate settlements with as many eligible de. mjnimis
parties as possible, a Region may wish to offer a choice of a no
cost overrun re-opener/higher premium or a cost overmn re-
opener/ lower premium in the same settlement. This provides
individual de minimis parties with the ability to choose the
appropriate settlement option, while allowing the Region to
incorporate different settlement terms in one settlement
agreement.
2. Reservation of Rights
A Region should commonly include a reservation of rights in
all early de ainimia settlements. Reservations of rights relate
to issues for which the Region is not providing a covenant not to
sue. Regions should provide reservations of rights, at a
minimum, for: 1) liability resulting from a settling party's
failure to comply with the terms of the settlement (e.g., non-
payment of money); 2) liability for natural resource damages
(unless the Federal Natural Resource Trustees have agreed to a
covenant not to sue); 3) criminal liability; 4) future disposal
activities at the site; or 5) any claim or cause of action not
expressly included in the covenant not to sue. Regions should
also consider a reservation of rights related to potential
27 §e.p Section IV.3. of this guidance for an expanded
discussion of premium payments.
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17 OSWER Directive #9834. 7-1C
liability under other federal statutes. A Region should reaffirm
that the settlement has no affect on the Agency's ability to
pursue non-settling parties.
3. Premiums
As a general matter, the risks posed to the Agency in
entering into djg miaifflis settlements are greater earlier in the
response process. These risks arise from site-specific
uncertainties with regard to completeness of PRP information,
knowledge of future response costs, as veil as the absence of an
agreement with the non-sis miniais PRPs for the eventual
performance of the RD/RA.
To address several of these risks, the early fle mi,nimi,s
settlement should include a premium payment for future response
costs.2a The premium charged should be in addition to the djg
minimia party's pro rata share of the site response costs. The
premium should be sufficient to compensate the Agency for the
risks associated with: 1) settling at a site where the future
response action has not been chosen; 2) possible cost overruns
for a remedy not yet selected and; 3) potential inability to
recover response costs, from other sources.
For early de minimis settlements, the premium chosen should
relate to the finality of the settlement (e.g., whether there is
a covenant not to sue with cost overrun re-opener). When a
Region is willing to offer or consider a settlement with a
covenant not to sue without a cost overrun re-opener, the
settlement should include a higher premium to address that
risk.29 This higher premium also reduces the risk of settling
when waste-in information may be preliminary and information
concerning financial viability of all PRPs is not complete. The
higher premium in this situation also reduces the possibility(
that the Agency will be unable to recover response costs from
other parties. Conversely, if the settlement includes a covenant
not to sue with a remedy cost re-opener, a lower premium may be
offerred. A lower premium may also be appropriate where PRP
investigatory work is complete, financially viable non-ifi miniais
parties ax* identified, or there is an agreement with the non
minimis parties to perform the RD/RA at the time of the early
minimis settlement.
28 If a Region is able to fully document the past costs, a
premium payment may not be necessary for that aspect of the
settlement.
29 See, "Guidance on Premium Payments in CERCLA Settlements,"
OSWER Directive #9835.6 (11/17/88).
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18 OSWER Directive #9834.7-ic
4. Contribution Protection
Regions should indicate to PRPs the Agency's belief that a
party which fully resolves its liability to the United states by
paying its fair share of all past and future costs in a sis
minimis settlement should qualify for protection against
contribution actions (regarding natters addressed in the
settlement), to the full extent provided in Sections 113(f) and
122(g)(5) of CERCLA.
5. Money Received in Settlement
Money received in an early de ainimis settlement should
generally be deposited in the invested portion of the Hazardous
Substance superfund (Trust Fund). This reimburses the government
fully for past costs expended and may provide additional funds
for the Trust Fund. Where appropriate, amounts in excess of past
costs may be set aside into other accounts, such as a site-
specific special account, a state-managed escrow account or trust
fund, or deposited to an EPA-approved, but PRP-established and
managed trust fund or escrow account. Where excess money is
set aside, a portion of that money may be available to reimburse,
whatever party will be performing the future response action
(EPA, the state or the non-^g mjpimj.s PRPs).
If it would facilitate the overall settlement at the site
and the non-jig minimis PRPs have been cooperative during the 4s
mininis settlement process, the Region may take the funds
received and apportion them between past and future response
costs, without fully reimbursing the government for its past
costs. Before agreeing to such an arrangement, a Region should
consider its ability to recover any remaining past costs from
other PRPs not a party to the early de minimis settlement. At a
minimum, the past cost component of the d£ mj-nj^mis parties
overall payment should be deposited into the Trust Fund. The
remainder of the payment may be then deposited into an account
established for the site. This approach may provide more money
for future response work at the site, while allowing the Agency
to-pursue non-settlors for remaining past costs. Apportioning
costs may also result in reducing the opposition of non-slfi
minimis parties to the de m|nimis settlement, since more money
may be available for use in funding the eventual future response
action (RD/RA).
30 Either the dj| minimis parties or non-flfi minimis parties
should set up the trust fund or escrow account for this purpose.
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19 OSWER Directive #9834. 7-1C
V. PURPOSE AND D8E OF THIS GUIDANCE
This guidance and any internal procedures adopted for its
implementation are intended exclusively as guidance for employees
of the U.S. Environmental Protection Agency. This guidance does
not constitute rulemaking by the Agency and may not be relied
upon to create a right or a benefit, substantive or procedural,
enforceable at law or in equity, by any person. The Agency may
take action at variance with this guidance or its internal
implementing procedures.
VI. FURTHER IN7ORKATION
For further information concerning this guidance, please
contact Gary Northman in the Office of Haste Programs Enforcement
at FTS or (202) 260-5646, or Ken Patterson in the Office of
Enforcement at FTS or (202) 260-3091.
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