EPA540-R-98-028
United States Solid Waste and OSWER9205.5-13A
Environmental Protection Emergency Response PB98-963 236
Agency (5305W) June 1998
RCRA, Superfund & EPCRA
Hotline Training Module
Introduction to:
Superfund Liability,
Enforcement, and Settlements
Updated February 1998
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DISCLAIMER
This document was developed by Booz-Allen & Hamilton Inc. under contract 68-WO-0039 to EPA. It is
intended to be used as a training tool for Hotline specialists and does not represent a statement of EPA
policy.
The information in this document is not by any means a complete representation of EPA's regulations or
policies. This document is used only in the capacity of the Hotline training and is not used as a reference
tool on Hotline calls. The Hotline revises and updates this document as regulatory program areas change.
The information in this document may not necessarily reflect the current position of the Agency. This
document is not intended and cannot be relied upon to create any rights, substantive or procedural,
enforceable by any party in litigation with the United States.
RCRA, Superfund & EPCRA Hotline Phone Numbers:
National toll-free (outside of DC area) (800) 424-9346
Local number (within DC area) (703) 412-9810
National toll-free for the hearing impaired (TDD) (800) 553-7672
The Hotline is open from 9 am to 6 pm Eastern Time,
Monday through Friday, except for federal holidays.
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SUPERFUND LIABILITY, ENFORCEMENT, AND SETTLEMENTS
CONTENTS
1. Introduction 1
2. Statutory Summary 3
2.1 Definitions 3
2.2 Liability 6
2.3 Enforcement 15
2.4 Settlements 19
2.5 Superfund Enforcement Reforms 22
2.6 Cost Recovery 24
2.7 Relationship to Remedial and Removal Actions 26
3. Summary 29
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1. INTRODUCTION
The objective of CERCLA is to reduce and eliminate threats to human health and
the environment posed by contaminants at uncontrolled hazardous waste sites.
To meet this objective, CERCLA created:
• A response program for hazardous substances, pollutants, and contaminants,
and
• A comprehensive liability scheme that authorizes the government to hold
persons associated with the contamination problem liable for the cost or
performance of cleanups.
Congress also created a revolving trust fund (the Hazardous Substance Superfund)
from which the President could draw funds to respond to releases and threatened
releases of hazardous substances, pollutants, and contaminants from CERCLA-
defined facilities.
CERCLA provides EPA with three basic options for cleaning up a hazardous waste
site:
• Under §§104 and 107, EPA can clean up the site using Superfund money, and
later recover cleanup costs from potentially responsible parties (PRPs)
• Under §106, EPA can order, or ask a court to order, PRPs to cleanup the site
• Under §122, EPA can enter into settlement agreements with PRPs that require
PRPs to clean up the site or pay for a cleanup under §107.
EPA has adopted an "enforcement first" policy for the cleanup of CERCLA sites. As
a matter of policy, when a site requires remediation under CERCLA and viable PRPs
for the site are identified, EPA will first require the PRPs to conduct the site cleanup
(either through a settlement agreement or through the issuance of §106
administrative orders) rather than conduct the cleanup with Superfund money.
Many of the questions the Hotline receives on liability, enforcement, and
settlements are purely legal and beyond our scope. We do not interpret or apply the
law or legal concepts to particular situations, nor do we supply information on case
law. We only answer questions relating to statutory and regulatory authority, and
explain how these tools are used as part of the CERCLA process.
The goal of this module is to describe the liability, enforcement, and settlement
provisions of CERCLA. When you have completed this module, you should be able
to:
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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2 - Superfund Liability, Enforcement and Settlements
• List the CERCLA enforcement mechanisms available to EPA
• Explain CERCLA §§104 and 106 provisions
• Define "potentially responsible party"
• Explain CERCLA §107 liability
• Cite and locate the relevant CERCLA documents on enforcement and liability
• Explain the differences between administrative and judicial enforcement and
settlement procedures
• List and compare the differences between enforcement authorities as they
apply to removal and remedial actions
• List the key enforcement steps in EPA's response process
• Specify noncompliance penalties and provide statutory citations.
Use this list of objectives to check your knowledge of this topic after you complete
the training session.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 3
2. STATUTORY SUMMARY
Congress provides EPA authority in CERCLA to take direct action to respond to
releases or threatened releases of hazardous substances that could endanger public
health or welfare or the environment. EPA also may take legal action to force
parties associated with contamination to clean up these sites or reimburse the
Superfund for the costs of a federally-funded cleanup. The Superfund program is
based on the premise that those responsible for the hazardous substances at a site
should bear the burden of the cleanup. If, however, those responsible for
contaminating a site cannot be found, are unable to clean up a site, or are unwilling
to negotiate a settlement, EPA can use Superfund money to finance the response
action. EPA also has the option of using Superfund money to conduct a response
action and later pursue cost recovery from responsible parties should the
circumstances at the site warrant immediate action or if the PRPs are viable but
unwilling to perform cleanup.
SARA's passage in 1986 significantly strengthened CERCLA's enforcement
provisions by incorporating enforcement tools to facilitate settlement negotiations
and enforcement measures to encourage or compel responsible party cleanups.
Mechanisms to pursue cost recovery from liable parties for an EPA-funded response
action also were enhanced.
One useful resource for information on Superfund liability, enforcement, and
settlements is the Enforcement Project Management Handbook (OSWER Directive
9837.2B). As a Superfund Information Specialist, you will find the answers to many
questions will be based on the language found in guidance documents. Since the
provisions of CERCLA are imposed on a site-by-site basis, very few answers to
callers' questions are found in the statute or regulations. The Enforcement Project
Management Handbook is a compilation of existing guidance and serves as an
important tool for locating information on specific topics.
The following is an overview of the CERCLA provisions for liability, enforcement,
and settlements. The module addresses each of these topics under separate
headings.
2.1 DEFINITIONS
Familiarity with the following terms is key to understanding this module.
ADMINISTRATIVE ORDER (AO)
An administrative order (AO) is a legal document, issued by an administrative
agency (e.g., EPA), compelling a party to act and prescribing the activities the
potentially responsible party (PRP) must undertake. Under CERCLA §106, EPA can
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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4 - Superfund Liability, Enforcement and Settlements
order, or ask a court to order, PRPs to clean up the site. EPA usually sets the
completion date for the cleanup process, as well as discrete deadlines for actions
leading up to that date. The AO includes provisions for oversight by the lead agency
and for associated costs. An AO may be "on consent" (AOC) if the agreement results
from successful negotiations and is signed by both the PRP and EPA; however, the
statute prohibits the use of AOCs for remedial actions. If the PRP is not cooperative,
or if the situation does not permit negotiation of an AOC, EPA has the authority to
issue a unilateral administrative order (UAO) compelling the PRP to conduct the
ordered activities. An AO, whether on consent or unilateral, is ordered and signed
by EPA.
CONSENT DECREE (CD)
A consent decree (CD) is a legal document, approved by a judge, which formalizes
an agreement reached between EPA and the PRP(s). The CD states when PRPs will
perform all or part of a site cleanup and what actions PRPs are required to perform.
An announcement of the consent decree must be published in the Federal Register
for public comment prior to its approval by a judge. Under §122, agreements to
perform remedial actions must be in the form of CDs.
COST RECOVERY
Cost recovery is the legal process by which EPA pursues parties liable under
CERCLA §107 (a) in order to recover money spent by the federal government on
response actions.
"DE MICROMIS" WASTE CONTRIBUTOR
A "de micromis" waste contributor is a PRP who is deemed by a settlement
agreement to be responsible for only minuscule amounts of waste at a CERCLA site.
EPA coined this term to denote a subset of de minimis waste contributors (Revised
Guidance on CERCLA Settlements with De Micromis Waste Contributors. June 3,
1996).
DE MINIMIS LANDOWNER
A de minimis landowner is a PRP who is deemed by a settlement agreement to be
the past or present owner of property on which a facility is located, but who did not
conduct or permit the handling of any hazardous substances at the facility and who
did not contribute to the release of hazardous substances at the facility (CERCLA
DE MINIMIS WASTE CONTRIBUTOR
A de minimis waste contributor is a PRP whose contribution to the hazardous
substance release is minimal in volume and toxicity in comparison to the other
wastes at that site (CERCLA §122(g)(l)(A)). The settlement agreement for such a
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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contributor specifies the party is responsible for only a minor portion of the
response costs.
GENERAL NOTICE LETTER
A general notice letter is a formal notice from EPA informing PRPs of their
potential liability for past and future response costs at a CERCLA site. Either before
or along with this notification, EPA also may include an information request to
determine the extent of PRP liability (CERCLA §104(e)).
INNOCENT LANDOWNER
An innocent landowner is a person who, after making "appropriate inquiry" into
previous ownership and uses of the property, purchased or acquired the property
without knowledge of the presence of hazardous substances on the property. PRPs
may assert this claim as a defense to liability under CERCLA §107(b)(3).
LIEN
A lien is a claim or charge on property for the payment of some debt, obligation, or
duty. CERCLA §107(1) authorizes the federal government to impose a lien on a
PRP's property subject to a response action.
MIXED FUNDING AGREEMENT
A mixed funding agreement is a settlement agreement whereby EPA settles with
fewer than all the PRPs for less than 100 percent of the response costs and, therefore,
EPA must pay for or undertake some portion of the cleanup (CERCLA §122(b)). The
three types of mixed funding agreements (preauthorization, cash-out, and mixed
work) are discussed further in Section 2.4 of this module.
POTENTIALLY RESPONSIBLE PARTY
A potentially responsible party (PRP) is an individual or entity including past or
present owners, operators, transporters, or generators, any or all of whom may be
liable under CERCLA §107(a).
SPECIAL NOTICE LETTER (SNL)
EPA uses SNLs under CERCLA §122(e) to initiate formal settlement negotiations for
a response action. EPA has discretion to use the special notice procedure when it is
believed the procedure will bring about negotiations that will result in settlements
between EPA and PRPs for a site. EPA may issue separate SNLs for operable units at
a remedial site if doing so will facilitate an agreement and expedite the remedial
action. CERCLA §122(e)(l)(A) requires EPA to provide the names and addresses of
PRPs, the volume and nature of substances contributed by each PRP identified, and a
ranking by volume of the substances at the facility to PRPs whenever available.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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6 - Superfund Liability, Enforcement and Settlements
2.2 LIABILITY
This section addresses the key factors in determining CERCLA liability. To be held
liable is to be subject to an obligation or be held responsible for a possible or actual
loss, penalty, expense, or burden. Under CERCLA, liability may be tied to property
ownership as well as to generation or transportation of hazardous substances, and
can entail a duty to pay money (e.g., assessment costs) or to perform an act
immediately or in the future (e.g., conduct a cleanup).
WHAT CREATES LIABILITY
CERCLA §104 (a) authorizes EPA to respond to a release or substantial threat of
release into the environment of a hazardous substance, pollutant, or contaminant.
• Under CERCLA §101(22), "release" is broadly defined and includes "any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the environment."
• Under CERCLA §101(8), "environment" is broadly defined and includes
surface water, ground water, land surface or subsurface strata, and ambient air
within the United States or under jurisdiction of the United States.
• Under CERCLA §101(14), "hazardous substance" is any substance EPA has
designated for special consideration under the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, or the Resource Conservation and
Recovery Act (RCRA). EPA also may designate additional substances as
hazardous substances under CERCLA. EPA maintains and updates a list of
hazardous substances in 40 CFR Part 302.
• Under CERCLA §101(33), "pollutant or contaminant" is any other substance
not on the list of hazardous substances which "will or may reasonably be
anticipated to cause" adverse effects in organisms or their offspring.
A number of releases or threatened releases do not trigger CERCLA response
authorities. Under CERCLA §101(14), Congress excluded petroleum, crude oil,
natural gas, and synthetic gas from the definitions of hazardous substance and
pollutant or contaminant. As a result, releases solely of petroleum, crude oil,
natural gas, and synthetic gas into the environment do not trigger CERCLA
response authorities, although they may be addressed under other environmental
statutes such as the Oil Pollution Act. Under CERCLA §101(22), several types of
activities are excluded from the definition of release and are not subject to CERCLA
response actions. These include:
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 7
• Workplace exposures covered by the Occupational Safety and Health Act
(OSHA)
• Vehicular engine exhausts
• Certain radioactive contamination covered by other laws
• Normal application of fertilizer.
Under CERCLA §104 (a) (3), Congress limits and generally disallows use of the Trust
Fund to finance federal response to releases of:
• Naturally occurring substances (such as radon) from locations where they are
normally found
• Products (such as asbestos) that are part of the structure of, and result in
exposure within residential, business, or community structures
• Substances (such as lead) in public or private drinking water supplies due to
deteriorating pipes.
CERCLA §101(10) defines releases, such as the discharge of pollutants in compliance
with a National Pollutant Discharge Elimination System (NPDES) permit under the
Clean Water Act, that qualify as federally permitted releases. Although EPA has full
authority under CERCLA to respond to federally permitted releases, the permittee is
not liable for cleanup costs of such releases.
WHO MAY BE LIABLE
CERCLA §107 (a) casts an extremely broad net in defining those persons that can be
liable for the costs of responding to a release or the threat of a release of hazardous
substances. The types of parties that can be held liable are:
• The current owners or operators of the facility or vessel
• Former owners or operators of the facility or vessel, if they owned the
property at the time of disposal
• Those who arranged for treatment or disposal of hazardous substances at a
facility (in most cases, the generators)
• Transporters of hazardous substances who selected the disposal site.
Anyone involved in the management of hazardous substances, from production to
final disposal and beyond, can be held liable. It is important to note that CERCLA
liability is retroactive, meaning that persons may be held liable for releases that
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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8 - Superfund Liability, Enforcement and Settlements
occurred prior to the enactment of the statute in 1980. Liability under §107 cannot be
transferred to another partner, even by contractual agreement (§107(e)).
TYPES OF LIABILITY
Two types of liability are imposed under CERCLA. The first, strict liability, is the
assessment of legal responsibility without regard to fault or diligence. To hold a
party strictly liable, the government must prove only that the PRP meets the
statutory definition of liability, regardless of the party's intent, knowledge, or
purpose. The government does not have to prove that the PRP acted in a negligent
manner; the government needs only prove that the PRP is in one of the four
statutory classes of liable parties found in §107, and that the release or threat of a
release of a hazardous substance occurred at the facility.
The second type of liability under CERCLA, joint and several liability, has been
applied by many courts in CERCLA cases. Joint and several liability means that if
the harm at the site is indivisible, such as unmarked, intermingled drums or
commingled wastes, any and every PRP at the site may be liable for the entire
cleanup cost, regardless of the amount of waste the PRP actually contributed to the
site. If the harm at the site is divisible, then the burden of apportioning the harm is
on the PRPs. The PRP who pays all or part of the costs of a site cleanup, however,
does have the right to sue other parties that may have been responsible, and to force
them to contribute funds (CERCLA §113(f)). In resolving contribution claims, the
courts may allocate response costs among liable parties using equitable factors as
appropriate. In general, EPA's practice is to attempt to identify and notify all PRPs
and issue orders or litigate against as many contributors as practicable.
AMOUNT OF LIABILITY
There are four types of costs outlined in §107 (a) (4) for which responsible parties may
be held liable: costs of removal and remedial actions plus interest; other necessary
response costs plus interest; damages for injury to natural resources plus interest;
and health assessment costs plus interest. Section 107(c)(l) specifies limits to the
dollar amounts of liability that may be imposed on an owner or operator. For
facilities, this amount equals the total of all response costs plus $50,000,000 for any
damages. There are specific limits set forth for different types of vessels as well. In
any case, if the responsible party was guilty of willful misconduct or is
uncooperative, that party can be held liable for the full costs of the response and
damages.
Under §107(c)(3), a responsible party who fails to clean up a site when issued an
administrative order under §106 potentially may be held liable in an amount at least
equal to, and not more than three times (treble damages), the cost incurred by the
government as a result of such failure to take proper action.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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DEFENSES TO LIABILITY
Defenses are legal arguments or factual claims raised in a lawsuit to prove why a
PRP should not be held liable. Section 107(b) specifies the defenses PRPs may raise
to avoid liability for the cost of a response. There are only three:
• An act of God
• An act of war
• An act or omission of a third party who is not an employee or an agent of the
defendant, and who does not have a contractual relationship with the
defendant.
The first two defenses are rarely invoked or applicable; a description of the third
defense follows.
THE THIRD-PARTY DEFENSE: THE "INNOCENT LANDOWNER" AND
INVOLUNTARY ACQUISITIONS BY GOVERNMENT ENTITIES
The third-party defense is used most frequently, and is often called the "innocent
landowner" provision. Under this defense, a landowner may rebut the
presumption of liability that runs with ownership of land by claiming that he or she
made a good faith effort to discover any contamination. The defendant has the
burden of proof. There is no set formula for proving the third-party defense; it is
determined by the facts, on a case-by-case basis. The court scrutinizes the
defendant's relationship to the property, specifically whether the defendant knew or
had reason to know of the disposal of hazardous substances at the facility. The
defendant raising the third-party defense must be free of both actual or inferred
knowledge and any contractual relationship concerning the property, except as
allowed under §101 (35)(A). A person who acquires contaminated property and who
can satisfy the requirements of §107(b)(3) and §101(35) may be able to establish a
defense to liability. Guidance on landowner liability and on the type of
investigation a buyer should perform prior to purchasing property in order to
demonstrate "due care" can be found in the August 18, 1989, Federal Register (54 FR
34235). In addition, the third-party defense may come into play where a person is
the victim of a so-called "midnight dumper."
A third party defense may also be asserted under CERCLA §101 (35) (A) by a
government entity (federal, state, or local) that involuntarily acquires contaminated
property. EPA provides examples of involuntary acquisitions in 40 CFR §300.1105.
With respect to a government entity that involuntarily acquires contaminated
property, the requirements for a third-party defense to CERCLA liability are the
following:
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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10 - Superfund Liability, Enforcement and Settlements
• The contamination occurred before the government entity involuntarily
acquired the property
• The government entity exercised due care with respect to the contamination
(i.e., did not cause, contribute to, or exacerbate the contamination)
• The government entity took precautions against certain acts of the party that
caused the contamination and against the consequences of those acts.
A government entity will not have a CERCLA liability defense if it has created or
contributed to the release or threatened release of contamination from the property.
As a result, acquiring property involuntarily does not unconditionally or
permanently insulate a government entity from CERCLA liability. The liability
defense described above does not shield government entities from any potential
liability that they may have as generators or transporters of hazardous substances
under CERCLA. For more information, see the October 3, 1996 EPA memorandum
entitled "Recently Enacted Lender and Fiduciary Liability Amendments," as well as
the factsheet entitled The Effect of Superfund on Involuntary Acquisitions of
Contaminated Property by Government Entities. December 1995.
LIABILITY EXEMPTIONS AND LIMITATIONS
Unlike defenses, which are legally allowable arguments that must be proved and do
not guarantee a bar to liability, an exemption automatically grants a release from
liability if the conditions of the exemption are met. Five exemptions from and one
limitation on CERCLA liability are discussed below.
Secured Creditors
The definition of owner or operator in CERCLA §101(20) (A) excludes persons whose
ownership rights in a property are held primarily to protect a security interest.
Holding a security interest means having a legal claim of ownership in order to
secure a loan, equipment, or other debt rather than retaining ownership for
purposes of profit or business. This exclusion protects those persons, such as private
and governmental lending institutions (e.g., banks), who may maintain a right of
ownership or guarantee loans for facilities that may become contaminated with
hazardous substances, from potential liability under §107 as an owner or operator.
More specifically, CERCLA §101 (20) (A) excludes from the definition of owner or
operator a person who, without participating in the management of a facility, holds
indicia of ownership primarily to protect his security interest in the vessel or facility.
Created by the Asset Conservation, Lender Liability, and Deposit Insurance
Protection Act of 1996, CERCLA §101(20)(E)-(G) clarifies key terms such as
"participation in management" for purposes of the secured creditor exemption.
Under §101(20)(F), a lending institution, or holder, participates in the management
of a facility if it exercises decision-making control over the borrower's
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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environmental compliance, or has responsibility for overall day-to-day decision
making. For example, a holder performing the functions of a plant manager or
operations manager would be participating in management. A lender's
requirement that a borrower come into compliance with applicable federal, state, or
local environmental regulations, however, would not qualify as participation in
management. The reconstruction and renegotiation of the terms of a security
interest, such as requiring payments of additional rent or interest, also would not
qualify as participation in management.
Fiduciaries
CERCLA §107(n) limits CERCLA liability of fiduciaries, which include trustees and
executors. Under §107(n), fiduciary liability under any provision of CERCLA shall
not exceed the assets held in the fiduciary capacity. Additionally, a fiduciary will not
be liable in its personal capacity for certain actions, such as: (1) undertaking or
requiring another person to undertake any lawful means of addressing a hazardous
substance; (2) enforcing environmental compliance terms of the fiduciary
agreement; and (3) administering a facility that was contaminated before the
fiduciary relationship began. The liability limitation and "safe harbor" described
above do not limit the liability of a fiduciary whose negligence causes or contributes
to a release or threatened release.
The term "fiduciary" means a person acting for the benefit of another party as a bona
fide trustee, executor, or administrator, among other things. It does not include a
person who: (1) acts as a fiduciary with respect to a for-profit trust or other for-profit
fiduciary estate, unless the trust or estate was created because of the incapacity of a
natural person, or as part of, or to facilitate, an estate plan; or (2) acquires ownership
or control of a facility for the objective purpose of avoiding liability of that person or
another person.
Nothing in the fiduciary subsection applies to a person who: (1) acting in a
beneficiary or non-fiduciary capacity, directly or indirectly benefits from the trust or
fiduciary relationship; or (2) is a beneficiary and fiduciary with respect to the same
fiduciary estate and, as a fiduciary, receives benefits exceeding customary or
reasonable compensation. Furthermore, nothing in the fiduciary subsection
precludes a claim against the assets of the trust or estate administered by the
fiduciary.
Involuntary Acquisitions by Units of State or Local Government
In addition to providing a third-party defense for government entities that
involuntarily acquire contaminated property, CERCLA also provides an exemption
from owner/operator liability for units of state and local government that
involuntarily acquire contaminated property. This exemption is found in CERCLA
§101 (20)(A), and 40 CFR §300.1105 provides some examples. This exemption does
not apply if the unit of government caused or contributed to the release or
threatened release of a hazardous substance from a facility.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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12 - Superfund Liability, Enforcement and Settlements
Service Station Dealers
Under CERCLA §114(c), service station dealers managing used oil to be recycled are
exempt from certain liability provisions if the dealer meets specific requirements.
The exemption is applicable to generator and transporter liability under §107 (a) (3)
and (4), and covers claims for cost recovery under §107. The service station dealer
still may be held liable under §107(a)(l) and (2) as an owner and operator.
State and Local Governments
Except for gross negligence or intentional misconduct, state and local governments
are not liable for costs or damages resulting from an emergency response to a
hazardous substance release (CERCLA §107(d)). Additionally, any person rendering
care or assistance pursuant to the NCP cannot be held liable for damages resulting
from such care.
Contractor Indemnification
Response action contractors (RACs) and state or local government employees are
protected from liability, except in cases of negligence, gross negligence, or intentional
misconduct (CERCLA §119(d)(2)).
EPA's DISCRETIONARY POLICIES ON LIABILITY
The Agency exercises its discretion in deciding whether to initiate enforcement
actions against certain parties who might otherwise be construed as one of the types
of liable parties under §107(a). The Agency has issued several policies concerning
the liability of such parties. These policies are described below.
Residential Homeowner
In July, 1991, EPA released its Policy Toward Owners of Residential Property at
CERCLA Sites (OSWER Directive 9834.6). The policy states that enforcement actions
will not be taken against owners of residential property located on Superfund sites.
The policy applies to properties that are owned and used exclusively for single
family residences of one to four units. Furthermore, the owner's knowledge of the
presence of contamination on the property at the time of purchase or sale shall not
affect EPA's enforcement discretion. A potential exception to this policy would be if
the homeowner's activities resulted in a release of a hazardous substance.
Owners of Property Above Contaminated Aquifers
Where hazardous substances have come to be located on or in a property solely as
the result of subsurface migration in an aquifer from a source or sources outside the
property, EPA will not take enforcement action against the owner of such property
to require the performance of response actions or the payment of response costs.
This policy is subject to the following conditions:
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements -13
• The landowner did not cause, contribute to, or exacerbate the release or threat
of release of any hazardous substances, through an act or omission. The
failure to take affirmative steps to mitigate or address groundwater
contamination, such as conducting groundwater investigations or installing
groundwater remediation systems, will not, in the absence of exceptional
circumstances, constitute an omission by the landowner within the meaning
of this condition.
• The person that caused the release is not an agent or employee of the
landowner, and was not in a direct or indirect contractual relationship with
the landowner. Cases where the landowner acquired the property, directly or
indirectly, from a person that caused the original release, will require an
analysis of whether, at the time the property was acquired, the landowner
knew or had reason to know of the disposal of hazardous substances that gave
rise to the contamination in the aquifer.
• There is no alternative basis for the landowner's liability for the
contaminated aquifer, such as liability as a generator or transporter under
CERCLA §107 (a) (3) or (4), or liability as an owner by reason of the existence of
a source of contamination on the landowner's property other than the
contamination that migrated in an aquifer from a source outside the property.
For more information, see EPA's Policy Toward Owners of Property Containing
Contaminated Aquifers, as published in the July 3, 1995 Federal Register (60 FR
34790).
Municipalities and Municipal Solid Waste
In the February 5, 1998 Federal Register (62 FR 8197), the Agency finalized its Policy
for Municipality and Municipal Solid Waste CERCLA Settlements at NPL Co-
Disposal Sites. The purpose of the policy is to provide a fair, consistent, and efficient
settlement methodology for resolving liability under CERCLA of generators and
transporters of municipal sewage sludge and municipal solid waste at co-disposal
sites on the NPL, and municipal owners and operators of such sites.
This policy supplements the 1989 Municipal Solid Waste Settlement (MSW) Policy
and continues the agency's policy of generally not identifying generators and
transporters of MSW as PRPs at NPL sites. In an effort to reduce litigation costs, the
policy establishes a unit cost formula ($5.30/ton) for those generators and
transporters seeking to resolve their liability to protect themselves from private
party contribution claims.
The policy also establishes a presumptive settlement range for municipal owners
and operators of co-disposal sites on the NPL who wish to resolve their liability. A
settlement baseline of 20 percent of the total estimated response costs for the site is
established as an amount for municipalities to resolve owner/operator liability.
Regions may offer settlements differing from this baseline amount, but generally
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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14 - Superfund Liability, Enforcement and Settlements
settlement amounts will not exceed 35 percent of the total estimated response costs.
Consistent with the 1989 MSW Policy, the Agency will also consider all claims of
limited ability to pay. Recognizing that municipal owner and operators are able to
perform in-kind services at a site (e.g., mowing, road maintenance, structural
maintenance), EPA will carefully consider any forms of in-kind services that
municipal owners and operators may offer as partial settlement of its cost share.
Prospective Purchasers
It is EPA's policy not to become involved in private real estate transactions;
however, EPA might consider entering into an agreement with a prospective
purchaser if it will have substantial benefits for the government and the prospective
purchaser satisfies specific criteria. The Agency recognizes that entering into an
agreement with a prospective purchaser of contaminated property, given
appropriate safeguards, may result in an environmental benefit through a payment
for cleanup or a commitment to perform a response action. EPA's experience has
shown that prospective purchaser agreements have also benefited the community
where the site is located by encouraging the reuse or redevelopment of property at
which the fear of Superfund liability may have been a barrier. In May 1995, EPA
adopted a policy which expands the circumstances under which prospective
purchaser agreements may be considered. Of the 68 total prospective purchaser
agreements reached, 51 have been concluded since May 1995.
EPA may reject any offer if it determines that entering into an agreement with a
prospective purchaser is not sufficiently in the public interest to warrant expending
the resources necessary to reach an agreement. The following criteria should be
considered when evaluating prospective purchaser agreements:
• EPA action at the facility has been taken, is ongoing, or is anticipated to be
undertaken by the Agency
• EPA will receive a substantial benefit either in the form of a direct benefit for
cleanup, or as an indirect public benefit in combination with a reduced direct
benefit to EPA
• Continued operation of the facility or new site development, with the
exercise of due care, will not aggravate or contribute to the existing
contamination or interfere with EPA's response action
• Continued operation or new development of the property will not pose
health risks to the community and those persons likely to be present at the
site
• The prospective purchaser is financially viable.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements -15
For more information see EPA's Guidance on Agreements with Prospective
Purchasers of Contaminated Property as published in the July 3, 1995, Federal
Register (60 FR 34792).
De Micromis Parties
It is EPA's policy not to pursue PRPs who have contributed only minuscule
amounts of hazardous substances to a Superfund site (i.e., de micromis
contributors), and to discourage other PRPs from bringing suit against them. If,
however, de micromis parties are threatened with litigation, EPA will enter in $0
settlements with such parties, thereby releasing such parties from any future liability
under CERCLA at that site. De micromis contributor settlements are not, however,
available to owners or operators of Superfund sites.
In June 1996, EPA issued new guidance which reaffirms the Agency's policy not to
pursue de micromis parties and includes model documents to streamline and
simplify the settlement process. For more information see Revised Guidance on
CERCLA Settlements with De Micromis Waste Contributors. June 3, 1996.
SCOPE OF CERCLA §107
The liability provisions established in §107 specify who is or may be liable for the
costs of a response action for a release of a hazardous substance. Section 107
identifies those parties associated with a release; however, it does not identify the
amount of money an owner, operator, generator, or other PRP will specifically pay.
2.3 ENFORCEMENT
One goal of the Superfund enforcement program is to make responsible parties pay
for the environmental damage they have caused. Ideally all PRPs would conduct
and pay for cleanup from the beginning. Frequently, however, the situation is an
emergency and there is not time to search for PRP(s) and ensure they take
responsibility for their action. In these cases EPA acts immediately, taking a "Fund-
lead" action, which uses federal money from the Superfund, and subsequently
pursues PRPs for cost recovery. When the situation permits, EPA policy is to seek
action by the responsible party before expending Fund resources. When this
happens the action is referred to as an "enforcement-lead" or "PRP-lead" action.
CERCLA provides a broad range of enforcement authorities that EPA can use to
meet the goals of the Superfund program. These include authorities to search a
PRP's property, order PRPs to clean up sites, negotiate settlements with PRPs to fund
or perform site cleanup, and to take legal action if the PRPs do not perform or pay
for cleanup. Figure 1 presents the steps initiated by EPA in the remedial
enforcement process.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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16 - Superfund Liability, Enforcement and Settlements
Figure 1
REMEDIAL ENFORCEMENT PROCESS
Initiate
PRP
Search
1
Issue General
Notice Letters
Exchange
Information
Issue Special
Notice Letters
Negotiate
Settlement
RI/FS Negotiations with a
60-90 Day Response
Moratorium
RD/RA Negotiations with
a 60-120 Day Response
Moratorium
PRP
Cleanup
Response
Negotiations
Successful?
Initiate Other
Enforcement
Options
PRP
Response
Refer §106 Case
Seek Treble Damages
Use Fund and Refer §107 Case
PRP IDENTIFICATION
To identify the parties responsible for site contamination, EPA conducts an
extensive search. PRP searches include activities such as site file searches, state
agency and EPA file reviews, title searches, and the construction of a history of
operations that occurred at the site. The PRP search does not necessarily need to be
completed before a list of potential parties is drawn up. In addition, EPA may issue
information request letters to parties who may have information about the site,
such as the names and addresses of owners or operators, the types of wastes found at
the site, and/or possible generators and transporters associated with the site. Once
EPA has enough information to identify parties as potentially liable for
contamination at a site, EPA issues a general notice letter to each PRP notifying
them of their potential liability (CERCLA §104(e)). After the PRPs are notified of
their potential liability, EPA begins an informal information exchange concerning
site conditions, PRP connections to the site, and the identification of other PRPs
(53 FR 5298; February 23, 1988).
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements -17
SPECIAL NOTICE PROCEDURE
Based on information obtained during the PRP search and information exchange
process, EPA may choose to issue SNLs to PRPs. CERCLA §122(e) contains special
notice procedures designed to facilitate formal negotiations with PRPs. The SNL
includes the names and addresses of other PRPs, and, if available, the volume and
nature of substances each PRP contributed and a ranking of the substances by
volume. Issuance of an SNL triggers a period of time called a moratorium, during
which certain EPA response and abatement actions at the site may not be taken
(CERCLA §122(e)(2)(A)). This time period lasts for 60 days and may be extended in
certain circumstances described below.
NEGOTIATIONS
The goal of the moratorium is to reach a settlement in which the PRPs agree to
conduct or finance response activities. If within 60 days the PRPs make a good faith
offer to conduct the response action, the moratorium may be extended up to an
additional 60 days to provide time for reaching a final settlement. If a settlement is
reached, the PRPs may conduct the response action under a consent decree or an
administrative order on consent with EPA or with EPA contractor oversight
(CERCLA §122(d)(3)). If there is no good faith offer or if negotiations fail, EPA may
conduct the response action (CERCLA §122(e)(4)).
PENALTIES
In addition to being liable for the costs of cleaning up contaminated sites, PRPs can
also be subject to penalties under CERCLA. Failure to comply with an
administrative order or a violation of the NCP can result in the assessment of an
administrative or judicial (civil) penalty or a criminal charge. Penalties assessed
directly by EPA are administrative. Penalties assessed by the court at the Agency's
request are generally referred to as judicial penalties. The following are examples of
penalties to which PRPs may be subject.
Under CERCLA §109(a), Class I administrative penalties of not more than $27,500
per violation may be assessed for failure to comply with the following provisions:
• Sections 103 (a) and (b); relating to release notification requirements
• Section 103(d)(2); relating to destruction of facility records
• Section 108; relating to financial responsibility
• Sections 122(d)(3) and 122(1); relating to settlement agreements for response
actions under §104(b) and administrative orders or consent decrees under
§120.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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18 - Superfund Liability, Enforcement and Settlements
Under CERCLA §109(b), failure to comply with the above mentioned provisions can
also result in Class II administrative penalties of not more than $27,500 per day for
each day in which the violation continues. In the case of a second violation, the
penalty can amount to $82,500 per day for each day the violation continues.
Under CERCLA §109(c), EPA also may begin an action in the United States District
court to assess and collect a penalty of not more than $27,500 per day for each day for
each above referenced violation. In the case of a second violation, the penalty can
amount to $82,500 per day for each day the violation continues.
Additional penalty provisions are found in several other sections of the statute. For
specific information on violations of other provisions in CERCLA, refer directly to
the section in question. Also refer to the Civil Monetary Penalty Inflation
Adjustment Rule which adjusted EPA's penalties upward by ten percent to account
for inflation (61 FR 69360; December 31, 1996).
CERCLA AWARDS
Any individual who provides information that leads to the arrest and conviction of
violators subject to criminal penalties may be awarded up to $10,000 (CERCLA
§109(d)). Any individual seeking an award must file a claim not later than 45 days
after a conviction in the prosecution for which the information was provided (57 FR
26142; June 21, 1989). Regulations in 40 CFR Part 303 specify who may be eligible to
file a claim for an award, how much may be awarded, and the criteria for payment of
awards.
RCRA VS. CERCLA ENFORCEMENT AUTHORITY
RCRA contains provisions for cleaning up sites contaminated with solid and
hazardous waste. In some instances both RCRA and CERCLA authority apply to a
response action. Factors such as the substances involved, the likelihood of the
defendant or respondent's compliance, and the availability of other enforcement
authorities to accomplish the objective are used to decide which law applies.
Generally, sites that may be cleaned up under RCRA or certain other laws will not
be put on the NPL. By "deferring" the cleanup authority to another program (e.g.,
RCRA) prior to placement on the NPL, EPA can reserve CERCLA response activity
funding for sites that are not eligible to be addressed under other federal authorities.
If a site on the NPL falls under RCRA authority, it usually will undergo RCRA
corrective action before Superfund remedial activity. In some cases, EPA may delete
the site from the NPL. On March 20, 1995, EPA published in the Federal Register a
revised policy setting forth circumstances under which a site may be deleted from
the NPL before the cleanup is complete. As long as the site is being, or will be
adequately addressed under RCRA corrective action authority or is subject to RCRA
permitting or an enforcement order, deletion can occur. For more information on
the interface between RCRA and CERCLA, see the September 24, 1996, EPA
memorandum entitled "Coordination between RCRA Corrective Action and
Closure and CERCLA Site Activities."
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements -19
FEDERAL FACILITIES
CERCLA enforcement at federal facilities is a complicated issue. Executive branch
agencies may not sue each other, nor may one agency issue an administrative order
to another without providing an opportunity to first settle the dispute. Thus, EPA
strives to work with other federal agencies on CERCLA compliance issues rather
than initiating enforcement actions. The most common tool EPA uses to ensure
federal facility compliance with CERCLA is an interagency agreement (IAG). Under
§120, all federal facilities that are on the NPL must be the subject of an IAG with
EPA. These interagency agreements specify milestones and deadlines for the federal
facility to complete remedial activities, such as developing the proposed plan, and
stipulate penalties for missing those deadlines. Through these agreements, EPA is
provided a level of oversight and enforcement to ensure federal facilities comply
with the requirements of CERCLA.
If EPA is given no other choice but to issue an administrative order against another
federal agency, it must be approved by the Attorney General. Citizens, however,
may sue federal facilities under the citizen suit provision in §310 of CERCLA.
Under this provision, citizens may sue a federal agency in federal district court to
enforce deadlines related to the RI/FS, to satisfy terms and conditions related to the
RD/RA, and to enforce any IAG terms. For more information on federal facility
response actions see the Federal Facilities Hazardous Waste Compliance Manual
(OSWER Directive 9992.4).
2.4 SETTLEMENTS
When negotiations are successful, EPA and the PRPs sign a legal document that sets
forth the requirements for cleanup. Settlements are authorized under CERCLA
§122. There are two types of settlement agreements, administrative orders on
consent and judicial consent decrees. Administrative settlements are authorized by
CERCLA, initiated by EPA, and do not require approval by a court. Judicial
settlements are filed in court by the Department of Justice (DOJ) on behalf of EPA.
The administrative settlement process may move more quickly and thus EPA
usually tries to use its administrative tools before referring a case to DOJ for judicial
action.
Settlements can be reached at various stages of the remedial process. Usually some
type of agreement is entered into before the Remedial Investigation/Feasibility
Study (RI/FS) or Remedial Design/Remedial Action (RD/RA). A settlement
agreement to conduct an RI/FS or a removal action is usually in the form of an
AOC. A settlement to perform the RD, while usually in the form of a CD (and
therefore lodged in court by DOJ), also may be done administratively through an
AOC. RA settlements, however, must be in the form of a CD. If settlement
negotiations fail or no good faith offer is received, EPA may issue a UAO to force
liable parties to conduct the response action, or EPA may use trust fund monies to
perform the cleanup and attempt to recover costs from the PRPs at a later date.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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20 - Superfund Liability, Enforcement and Settlements
Under §106, EPA has the authority either to issue AOs or refer enforcement cases to
DOJ.
The settlement tools available to EPA under CERCLA §122 are used as incentives to
encourage PRPs to settle and avoid being sued for cost recovery. These tools are
discussed below.
MIXED FUNDING
Mixed funding agreements allow EPA to settle with some PRPs at a site while
continuing to pursue non-settling PRPs for cost recovery (§122(b) and 53 FR 8279;
March 14, 1988). These settlement tools were not available to EPA until SARA was
enacted in 1986. There are three types of mixed funding settlements:
• Preauthorization; PRPs agree to conduct the response action and the Agency
agrees to allow a claim against the Fund for a portion of the costs
• Mixed work; PRPs agree to conduct discrete portions of the response activities
and EPA agrees to conduct the remainder
• Cashout; PRPs pay for a portion of the response costs up front and EPA
performs the response action.
When evaluating the appropriateness of using a mixed funding settlement, EPA
will first consider the quality of the overall settlement offer. In 1985, EPA published
an Interim CERCLA Settlement Policy (OSWER Directive 9835.0) that outlined ten
criteria to help determine the benefits of a PRP settlement offer amounting to less
than 100 percent of the cost of a cleanup at a site (50 FR 5034; February 5, 1985). The
criteria of particular importance for mixed funding settlements include the strength
of the liability case against settlers and any non-settlers, the amount of money
potentially withdrawn from the Fund, and other mitigating and equitable factors.
For a complete description of the Interim CERCLA Settlement Policy as it relates to
mixed funding settlements, consult the March 14, 1988, Federal Register (53 FR
8279).
DE MINIMIS
A de minimis settlement is a final settlement between parties who meet the
requirements of §122(g)(l). These settlements allow parties to pay a discreet or
specific amount of response costs and avoid future legal costs. There are two types
of de minimis settlements available to qualifying PRPs: de minimis waste
contributor settlements and de minimis landowner settlements.
Under §122(g)(l)(A) relating to generators, a PRP who can prove the hazardous
substances they contributed to the site are minimal in amount and toxicity in
comparison to other hazardous substances at the site may qualify for a de minimis
waste contributor settlement. The PRP only would pay for a minor portion of the
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 21
response costs. As a subset of de minimis waste contributor settlements, CERCLA
provides the Agency with the authority to enter into settlements with persons who
may have contributed minuscule amounts of hazardous substances at a site. These
settlements, known as de micromis settlements, are helpful in reducing transaction
costs associated with PRPs seeking contribution from non-paying PRPs under
§113(f). A de micromis settlement may be especially appropriate for such entities as
small businesses, associations, nonprofit organizations, or other persons that do not
manufacture large amounts of hazardous substances. The need for de micromis
settlements has arisen largely in municipal/industrial "co-disposal" landfill cases
where generators of chemical or industrial wastes have brought contribution actions
against large numbers of small parties who contributed only trash or other
municipal solid waste. In such cases, the resulting litigation and other transaction
costs can overwhelm the truly small volume parties, and are likely to far exceed the
allocable share of each such party, even if liability can be established. For additional
information on de minimis and de micromis settlements, see OSWER Directive
9834.7-01C and Revised Guidance on CERCLA Settlements with De Micromis Waste
Contributors. June 3, 1996.
Along with de minimis and de micromis contributor settlements, under CERCLA
§122(g)(l)(B), qualifying landowners of property on which a Superfund site is located
who, during the term of ownership, did not conduct or permit generation,
transportation, storage, treatment or disposal at the facility may enter into a de
minimis landowner settlement limiting their liability at a site. The requirements
which must be satisfied in order for the Agency to consider a settlement with a
landowner under the de minimis settlement provisions are analogous to the
elements which must be proved in order for a landowner to establish a third-party
defense under §§107(b)(3) and 101(35). De minimis settlements may be entered
either through consent decrees or administrative orders on consent.
As part of the Superfund Reforms, EPA is encouraging the use of de minimis and de
micromis settlements to expedite the settlement process and relieve minor
contributors from liability. To foster these settlements, EPA published the revised
documents entitled Model CERCLA §122(g)(4) De Minimis Contributor Consent
Decree and Model CERCLA §122(g)(4) De Minimis Contributor Administrative
Order on Consent. September 19, 1995, which are to be used as guidance by EPA and
DOJ staff when negotiating de minimis contributor settlements. On June 3, 1996,
EPA published the Revised Guidance on CERCLA Settlements with De Micromis
Waste Contributors, that doubles the cut-off for the de micromis contribution
threshold. If necessary, EPA will enter into a settlement with de micromis parties
for no money in order to provide de micromis party contribution protection from
third party suits. For further guidance on de minimis landowner settlements, see
the August 18, 1989, Federal Register (54 FR 34235).
COVENANT NOT TO SUE
A covenant not to sue is a release from liability for PRPs who wholly or partially
clean up a site or pay for the cost of cleanup. According to §122(f), EPA may issue
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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22 - Superfund Liability, Enforcement and Settlements
covenants not to sue for CERCLA liability, including future liability, in the
settlement of some CERCLA cases. EPA grants releases from liability based on the
Agency's confidence that the remedy will prove to be effective and reliable. The
covenant not to sue is given in exchange for a PRP's agreement to perform the
response action or to pay for an Agency-lead cleanup, and does not take effect until
PRPs have completed all actions required by the CD or the AOC. Covenants not to
sue include "reopener" provisions allowing EPA to bring administrative or judicial
actions against a PRP where previously unknown conditions or new information
indicate that the remedy is no longer protective of human health or the
environment (CERCLA §122(f) and 53 FR 28041; July 27, 1987). For example, EPA
may choose to enter into a covenant not to sue to encourage purchasers to buy
contaminated property for cleanup, redevelopment, or reuse, without fear of future
liability. EPA will consider such agreements with prospective purchasers under
certain conditions, as discussed back in Section 2.2 under EPA's discretionary
policies on liability (60 FR 34792; July 3, 1995).
ALTERNATIVE DISPUTE RESOLUTION
In 1990, Congress passed the Administrative Dispute Resolution Act, which
encourages all federal agencies to use alternative dispute resolution (ADR)
techniques to aid in the mitigation of federal agency disputes. Mediation, EPA's
most frequently used ADR method, involves the use of a neutral negotiation
facilitator who has no decision-making power. The agreements reached in a
mediation session are nonbinding. Although some believe that ADR may require
additional work and funds, EPA has established a Headquarters liaison position to
coordinate ADR activities agency-wide. EPA has also sponsored pilot projects
testing the success of ADR. For more information with respect to ADR, refer to the
document entitled Final Guidance on the Use of Alternative Dispute Resolution in
Enforcement Actions (OSWER Directive 9834.12) and Use of Alternative Dispute
Resolution in Enforcement Actions. May 1995.
2.5 SUPERFUND ENFORCEMENT REFORMS
Through three rounds of initiatives called the Superfund Administrative
Improvements and Reforms, EPA has been reforming the Superfund program to
make it work faster, fairer, and more efficiently. The following information
highlights several of EPA's enforcement reforms that are designed to encourage
parties to settle and to ensure the equitable treatment of parties in the Superfund
process. For more comprehensive information on EPA's reform efforts, see the
module entitled Superfund Administrative Improvements/Reforms.
ORPHAN SHARE COMPENSATION
Under CERCLA's joint and several liability system, at sites where there are parties
who have no money to contribute to the cleanup or who are no longer in existence,
viable potentially responsible parties (PRP's) may be required to absorb the shares
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 23
that are attributable to such insolvent and defunct PRP's. In an effort to enhance
fairness and encourage PRP's to enter into settlement agreements to perform
cleanups, EPA announced in October 1995 that it would compensate performing
parties for a limited portion of orphan shares in future settlement agreements. This
reform was expanded in September 1997 to include orphan share compromises in
cost recovery settlements in an attempt to further enhance fairness and reduce
litigation costs.
The term orphan share refers to that share of responsibility which is specifically
attributable to parties EPA has determined are identifiable and potentially liable,
insolvent or defunct, and unaffiliated with any party liable for response costs at the
site. Regions may provide a compensation for the remediation of the site as long as
it does not exceed: 1) the cost of remediation for the orphan share; 2) the sum of all
unreimbursed past cost and projected future oversight costs; or 3) 25 percent of the
projected ROD remedy or non-time-critical removal costs. For more information
with respect to orphan share refer to the document entitled Interim Guidance on
Orphan Share Compensation for Settlors of Remedial Design/Remedial Action and
Non-Time Critical Removals. June 3, 1996 and Addendum to the "Interim CERCLA
Settlement Policy". September 30, 1997.
SITE-SPECIFIC SPECIAL ACCOUNTS
At some sites, EPA places settlement proceeds for future work received from certain
parties, e.g., de minimis settlors, into site-specific special accounts. In October 1995,
EPA announced its intention to encourage greater use of special accounts for
settlement funds to be used for future response actions at Superfund sites and to
ensure that interest earned by special accounts can be credited to these accounts and
be available for future response actions at the sites in question.
In March 1996, EPA issued a memorandum to its Regional Offices, encouraging
them to use special accounts for settlement funds and advising them on the creation
and use of these accounts (Transmittal of Special Account Short Sheet"). In June
1996, EPA reached agreement with the Office of Management and Budget (OMB) and
the Department of the Treasury stating that interest earned by special accounts can
be credited to these accounts and used by the Agency to carry out the settlement
agreements. This means that EPA can retain and apply interest as well as settlement
funds to clean up specific sites. In October 1996, EPA sent a memorandum to the
Regions outlining the agreement with OMB, providing principal and interest
balances in special accounts and providing directions on how to request these funds.
EQUITABLE ISSUANCE OF UAOS
Concerns have been expressed that EPA has issued UAOs under CERCLA §106
authority to only a subset of the parties which have been identified for a particular
site. In order to assure fair treatment of responsible parties, in October 1995, EPA
announced its commitment to ensuring that UAOs are issued to all appropriate
parties following consideration of the adequacy of evidence of the party's liability,
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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24 - Superfund Liability, Enforcement and Settlements
their financial viability, and their contribution to the contamination at the site.
On August 2, 1996, EPA issued a memorandum entitled, "Documentation of
Reason(s) for Not Issuing CERCLA §106 UAOs to All Identified PRPs," reaffirming
EPA policy to issue UAOs to the largest manageable number of PRPs after
consideration of appropriate factors.
REDUCED OVERSIGHT
As the Superfund program has matured, responsible parties have developed a
considerable amount of experience in conducting response activities at sites. Some
not only have used this experience to perform high quality work, but have acted
cooperatively with EPA throughout the cleanup and enforcement processes. In
recognition of this development, and to promote further cooperation, EPA
announced in October 1995 that it has reduced oversight at some sites and will
identify additional opportunities for reduced oversight of responsible parties.
Reduction of such oversight results in decreased transaction costs for EPA and
cooperating parties, and should increase the incentives for settlement.
On July 31, 1996, EPA issued guidance entitled Reducing Federal Oversight at
Superfund Sites with Cooperative and Capable Parties (OSWER #9200.4-15), that
presents factors for the Regions to consider when determining if a PRP is
cooperative and capable, and thus eligible for reduced oversight. The guidance
encourages Regions to discuss oversight with stakeholders, acknowledge those
parties that have already received reduced oversight, and discuss future oversight
plans. The guidance also provides some examples of how oversight can be reduced,
but recognizes some situations where additional reductions in oversight may not be
warranted (e.g., highly complex sites or cleanups with substantial community
involvement).
2.6 COST RECOVERY
If settlement negotiations are not successful, EPA will finance and conduct the
response action and subsequently pursue cost recovery from the liable parties. This
section addresses various types of cost recovery actions such as EPA recovering costs
from PRPs for Fund money spent to perform a response action; PRPs seeking
reimbursement for response costs from other PRPs; and private parties recovering
costs for the performance of a response action from the Fund or PRPs.
EPA AND PRP RESPONSES
CERCLA §107 (a) authorizes EPA to initiate cost recovery actions for all federal costs
not inconsistent with the National Contingency Plan (NCP) which are incurred
during a response to an actual or threatened release of a hazardous substance. Cost
recovery can be pursued for the costs of a removal, RI/FS, and RD/RA, including
EPA's costs of overseeing PRP responses and interest. The enforcement actions to
recover costs may include demand letters, negotiations with PRPs, alternative
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 25
dispute resolution, administrative settlements, judicial settlements, and litigation.
For compromises of claims at sites where the total response costs exceed $500,000,
EPA must seek prior approval from DOJ.
In most cases, PRPs will negotiate with EPA over the extent of liability or the costs
incurred. If the negotiations are successful, EPA can issue an AOC or the court will
approve the terms of the settlement for which the PRP must reimburse EPA for its
response costs. If the PRPs refuse to reimburse EPA for those costs, EPA can refer the
case to DOJ to recover costs. CERCLA §113(g) established a statute of limitations on
cost recovery actions; an action to recover costs must start within three years of
completing a removal action or within six years after starting construction of the
remedial action (OSWER Directive 9832.9).
CERCLA §§107(1) and (m) impose a lien on the property or vessel which is subject to
a removal or remedial action and owned by a party who is liable under §107 (a)
(further discussion on this subject can be found in supplemental Guidance on
Federal Superfund Liens. OSWER Directive 9832.12-la). The lien arises when the
PRP receives written notice of its potential liability for response costs or when the
U.S. first incurs response costs at the site, whichever is later, and continues until the
PRP's liability is fully satisfied or becomes unenforceable because of the statute of
limitations (CERCLA §113(g)).
In addition to EPA initiating cost recovery actions, PRPs can seek to recover money
expended in performing any response action from any other PRPs associated with
the site. These costs must be consistent with the NCP. During or following a civil
action under §§106 or 107(a), any person may seek contribution for response costs
from anyone else who is liable or potentially liable. For example, if EPA has begun
an action to recover funds from Responsible Party A, Party A can demand
reimbursement from Responsible Parties B, C, and D. Responsible Party A also can
sue B, C, and D for cost recovery even if A has not been sued by EPA (see §113(f) and
40 CFR §300.700). A court can allocate the total response cost using appropriate
factors, such as the volume of hazardous substances contributed by each party, if the
parties are unable to come to a settlement.
OTHER PARTY RESPONSES
Section 300.700 of the NCP states that any party may conduct a response action to
reduce a release or a threat of a release. Parties conducting a cleanup may recover
the costs of a response action, plus interest, from the Fund or from the responsible
parties using one of several statutory mechanisms set out in Subpart H of the NCP.
Responsible parties may not recover costs for which they are liable.
Pursuant to CERCLA §107(a), a private party conducting a cleanup may receive a
court award of response costs, plus interest, from the responsible party (s). In order
for the private party to be eligible for reimbursement, the response action must be
conducted in a manner "consistent with the NCP." This means that the action must
be in substantial compliance with the requirements in 40 CFR §§300.700(c)(5) and (6).
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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26 - Superfund Liability, Enforcement and Settlements
Private parties can use the mechanism provided in CERCLA §111 (a) (2) to recover
costs from the Fund for certain activities (40 CFR §300.700(d)). To qualify for
reimbursement, EPA must preauthorize the response activities and the eligible
person must demonstrate the capability to respond safely and effectively to the
release, and establish that the action will be consistent with the NCP.
Preauthorization will be granted to a PRP only subject to a §106 order or, as
mentioned in Section 2.4 of this module, preauthorization can be a settlement
agreement pursuant to §122. For more information on response claims procedures
see the January 21, 1993, Federal Register (58 FR 5460).
A party who has complied with a §106 (a) enforcement order may seek
reimbursement for response costs incurred when complying under §106(b) (40 CFR
§300.700(e)). Section 106(a) of CERCLA allows EPA to unilaterally order PRPs to
implement site cleanups when a release or threat of a release poses an imminent
and substantial endangerment to human health or the environment. If a PRP
complies with a CERCLA §106 (a) order, the PRPs may petition EPA under §106(b) for
reimbursement of cleanup costs from the Superfund if they believe they are not
liable for all or part of the costs or if it is found that EPA's response decision was
"arbitrary and capricious." More information on §106(b) reimbursement can be
found in EPA's Revised Guidance on Procedures for Submitting CERCLA §106(b)
Reimbursement Petitions and on EPA Review of Those Petitions, as published in
the Federal Register on October 25, 1996 (61 FR 55248).
Section 123 of SARA provides for local governments to receive reimbursement for
the costs of temporary emergency measures (such as security fencing or response to
fires and explosions), that are necessary to mitigate injury to human health and the
environment. This reimbursement is limited to $25,000 per response and only one
local agency or government can be reimbursed per incident. Specific procedural
regulations pertaining to local government reimbursement are set out in 40 CFR
Part 310 (63 FR 8284; February 18, 1998).
2.7 RELATIONSHIP TO REMEDIAL AND REMOVAL ACTIONS
The enforcement, settlement, and cost recovery activities occur simultaneously with
site cleanup activities. For an enforcement-lead remedial action, EPA's general
sequence of events is to identify PRPs, issue notice letters, and conduct an RI/FS.
The PRPs may conduct the RI/FS under a CD, an AOC, or a UAO (§122(d)(3)). The
overwhelming majority of RI/FSs performed by PRPs are conducted under AOCs.
When a §106 remedial action is initiated, there are three possible outcomes. The
Agency may receive a "good faith" offer from a PRP, receive no response from a
PRP, or engage in negotiations with a PRP that end unsuccessfully. If EPA receives a
good faith offer to conduct or pay for the response action, the Agency will attempt to
negotiate a settlement. If the response is unfavorable or negotiations are
unsuccessful, a unilateral §106 order may be issued. If the PRP does not comply with
the order, EPA may refer the case to DOJ to file a civil suit.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 27
Removal actions, because of their emergency nature and shorter time frame, have a
less complex administrative process than the remedial program, and therefore
enforcement procedures for removals are more straightforward. Removal
enforcement settlements usually are finalized by administrative orders (AOs) rather
than consent decrees which are required for remedial action settlements. AOs are
less formal since they are written by EPA and do not require judicial approval. The
AO may be on consent if the PRP willingly agrees to perform the prescribed
activities, or an AO may be issued unilaterally, i.e., as a UAO, if the PRP is
uncooperative, forcing EPA to order it to conduct a cleanup.
Although the AO enforcement mechanism may be used to conduct an enforcement-
lead emergency removal action under §106 of CERCLA, the AO is not often used in
these situations. The circumstances are usually better suited to Fund-lead actions
since emergency situations do not allow sufficient time to issue such enforcement
orders. For removal actions, EPA can conduct a cleanup under §104 response
authority and use §107 to seek reimbursement if the PRP does not respond to an
order, if the PRP's cleanup efforts are inadequate, or if a PRP cleanup cannot be
conducted quickly enough in an emergency.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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28 - Superfund Liability, Enforcement and Settlements
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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Superfund Liability, Enforcement, and Settlements - 29
3. SUMMARY
CERCLA provides EPA a broad set of legal tools to facilitate the process of cleaning
up hazardous waste sites. These tools include a variety of enforcement
mechanisms, such as administrative order authority and judicial enforcement
authority. CERCLA includes strong liability provisions, such as the authority and
the funding to take direct action to clean up sites and pursue cost recovery from
PRPs. Section 104 provides EPA with the authority to conduct a cleanup, issue
information requests to gather evidence of PRP liability, and obtain site access.
Section 106 includes provisions for EPA to unilaterally order PRPs to clean up sites
and issue fines for not complying with orders. The liability provisions of §107
provide EPA with the authority to recover all response costs, determine the amount
of liability, pursue cost recovery, and identify parties associated with a release.
Section 122 authorizes EPA to enter into agreements with PRPs that allow the PRPs
to conduct all or part of the response activities. Combined, these authorities allow
EPA to consistently strive to ensure uncontrolled hazardous waste sites are cleaned
up, and that the parties responsible for the contamination bear the burden of paying
for the response.
The information in this document is not by any means a complete representation of EPA's regulations or policies,
but is an introduction used for Hotline training purposes.
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