UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
2 C
OSWER Directive 9834,7-1B
MEMORANDUM
SUBJECT*. Methodologies for Implementation of CERCLA Section
122{g}(l)(A} Be Mlnlnis Waste Contributor Settlements
FROM: Bruce M. Diamond, Directof^
Office of Waste Programs Enforcement
Glenn L, Onterberger _L. /
Associate Enforcement Counsel for Waste
Office of Enforcement and Compliance Monitoring
TO: Waste Management Division Directors,, Regions 1-K
Regional Counsels, Regions I-X
We are attaching the "Methodologies for Implementation of
CERCLA Section 122 (g) (1) (A) Qs. Minim is Waste Contributor
Settlements » " which is designed to provide practical assistance in
the evaluation and development of c|e Bjji4jEJL§. contributor settlement
proposals and agreements.
One of the issues Identified in the "Administrator's
Management Review of Super fund,, H was increased usage of settlement
tools. We encourage you to develop c|e mjfilffl^s settlements and we
are looking into ways to provide incentives for the Regions to
utilize this settlement tool, As we gain experience in the use of
de ainimis settlement tools, we would like to hear from the Regions
regarding what barriers they encounter in achieving de nun jms
settlements. This will help us understand and develop effective
ways of supporting the Regions in their use of this settlement
tool ,
There is a separate document entitled "Guidance on Landowner
Liability under Section 10? (a) {1} of CERCLA, fie Settlements
under Section 122(g)(l)(B) of CERCLA,, and Settlements with
Prospective Purchasers of Contaminated Property," (issued on June
6, 1989, OSWER Directive 9835.9, published on August 18, 1989 at
54FR34235) that focuses on c|e minj|g.is landowner settlements,
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- 2 -
The June 17, 1988 "Revision of CERCIA Civil Judicial
Settlement Authorities Under Delegations 14-13-B and 14-14-E,"
OSWER Directive 9Q12.10-a, provides for delegation of Section
122(g}(l)(A) settlements with generators. However, the first
generator de minimis administrative order or consent decree
negotiated by each Region must receive the concurrence of the
Assistant Administrator for Enforcement and"Compliance Monitoring
or his designee ("AA-OECM") and the Assistant Administrator for
Solid Waste and Energency Response or his designee ("AA-QSWER").
After the Region has concluded one de minimis settlement with a
generator, other such settlement nay be entered into by the Regions
on behalf of, the Agency upon prior consultation with the AA-QECM
and AA-OSWER or their designees.
For further information or follow-up questions, please ask
your staff to contact Tai-ming Chang of OWPE/CED at (FTS) 382-4839,
(mail code OS-510) or Alice Crowe of OECK-Waste at (ITS) 382-2845
(mail code LE-134S).
Attachments
cc: Lisa Friedman, OGC
David Buente, DOJ
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December 20, 1989
OSWER Directive 9834.7-IB
H«thodoLogi«« for Implementation of C2RCLA
Section 122(g)(!)(*> fit Minimis
W**t« Contributor Settlements
United States Invironmental Protection Agency
401 M street, s.w.
Washington, D.c. 20460
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INDEX
Methodologies for Implementation of CERCLA
Section l22lg)(l)(A) Be Miniaia
Waste Contributor Settlements
I. PURPOSE AND INTRODUCTION 1
II, DEFINITION . 2
III. OBJECTIVES OF 21 MINIMIS SETTLEMENTS 2
IV. BACKGROUND: CRITERIA FOR ELIGIBILITY • 3
V. CHARACTERISTICS OF POTENTIAL ££ MINIMIS CANDIDATES 4
VI, EVALUATION OF A d MINIMIS PROPOSAL 5
A. Site Management Plan 6
B. Communication 6
C. Timing i
D. Determination of Eligibility 10
E. NBAR Preparation n
F. Costs 11
G. Premiums 12
H. Calculation of PRP Share 12
I. Reopeners i3
J. Settlement Options 14
VII. NEGOTIATIONS AND SETTLEMENT .16
A, Distribution of is fljpijlq Monies Collected 16
VIII. PURPOSE AND USE OF THIS GUIDANCE 17
IX. GUIDANCE DOCUMENTS 13
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COH?IDBMTIAL Final December 20. 1989
HBTHODOLOGIES FOR IMPLBMENTATIOH
OF CERCLA BBCTIOH 122
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and settlement, A list of guidance documents is provided at the
end of this methodology.
II. DEFINITION
The June 19, 1987 "Interim Guidance 'on Settlements with De. Minim is
Waste contributors under Section 122(g) of SARA" defines a de
minimis party as a "potentially responsible party (PRP) who
satisfies the requirements for liability under §!07(a) of CERCLA
and who does not have a valid |107(b} defense, but who has made
only a minimal contribution (by amount and toxicity) in comparison
to other hazardous substances at the site."
III. OBJECTIVES 07 gf MINIMI8 SETTLEMENTS
The objectives in pursuing a de minimis -settlement are as follows:
o To resolve de minimis parties' CERCLA civil liability to EPA
in a final manner for all past and future response activities
at a site.
o To resolve de minimjis parties' CERCLA civil liability to EPA
relatively early in the remedial process to reduce transaction
costs for the settling de minimig parties and the government.
o To obtain a sum certain with, in most instances, a relatively
modest effort on the part of the government. This replenishes
the Superfund and may (if appropriate and if part of a
comprehensive settlement under which response action will be
performed by other site PRPs) provide upfront monies for the
parties implementing the work at a site.
o To provide an incentive to non-d.fi minimis parties to settle
simultaneously by offsetting the contributions of de
parties from the total cost of the response action.
2Nonet&eless, under appropriate circumstances, £e.' p.in in is
settlement* should contain a reopener that reserves the right of
the United States to proceed against the fls mj.nimis party if it is
later discovered that the party's contribution to the site exceeded
that previously stated. The settlement nay also contain reopener5
to reserve the United States1 right to proceed against the de
minimis party if there are cost overruns or further response action
is necessary in addition to the work specified in the ROD. For a
more detailed, discussion, including discussion of other standard
reopeners, see "Reopeners," pp. 13-14 belov.
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o To simplify negotiations and litigation by reducing the total
number of parties involved.
Several of the government's objectives in "pursuing 4g minim is
settlements also affect the non-djt iftinimj.3 parties at a site, in
addition, the non-djg BJnimis parties benefit in the following ways.
o The non-ge. minim is parties may not be burdened with third
party suits against settling de^ JLJajtmj^ parties.
The non-de. lioimiff parties' transaction costs may be reduced,
o A els mj.ni^9 settlement may, where appropriate, provide a
source of start-up funds for a RD/RA.
iv. BACKGROUND: CRITERIA FOR ELIGIBILITY
The following criteria are specified in |l22(g)(l) and in the de
guidance. In the evaluation of any de minimis settlement
proposal, all of these criteria must be met.
o The settlement involves only a minor portion of the response
costs at the site. This criterion is applied to the
individual de ilnjpip party's settlement payment (as reejuired
by §122 (g) ) . The Agency also considers the collective de.
parties' settlement payment (as a matter of policy).
To date, collective djg i&lnJ^nijS settlement payments have ranged
up to 331 of the site response costs.
o The amount of the hazardous substances contributed by the
individual la minimal in comparison to other hazardous
substances at the site. To date, settlement proposals have
used between 0.2% and 2.0% of total waste at the site.
o • The toxic or other hazardous affects of the substances
contributed by the individual are minimal la comparison to
other hazardous substances at the site. The June 19, 1987
guidance interprets "minimal in comparison" in the context of
toxicity as "not significantly more toxic than...."
o The settlement is practicable and la the public interest.
This i* determined through an evaluation of the strength of
the omrull case including that against viable non-de. mj n La Ls
partie* and the impact a de minimis settlement would have on
the major party settlement and litigation.
This element also includes an understanding of the
government's interests in settling out with de. jpjLnJLmJ-s
parties. The settlement should initially be based upon
adequate information regarding project costs, PRP waste- in
contributions, and PRP viability. In addition, the settlement
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base payment should be based upon the PRPs1 volumetric share
augmented by their volumetric share of the orphan share.
The total 4ft miqimis PRP settlement should include, in addition,
a premium payment*and/or reopenera for cost overruns during
implementation of the remedy and for supplemental remedies cr
additional work to be performed in the event the.implemented remedy
is. not protective of public health and the environment. Premiums
are based on engineering and legal judgement in relation to the
certainty of the government's remedy and the litigation risks of
the case. "
7. CHARACTERISTICS OF POTENTIAL fig MINIMI8 CANDIDATES '
The characteristics of potential candidates are described below.
o The PEP must qualify for settlement under §122 (g) (1) (A) as
quoted above.
o The waste contributions (volume and toxicity} of each party
generally are adequately documented (i.e., .good waste-in
list). In addition, the liability and viability of the non-
' djg m^nimis, parties.are established. The PRP search is the
source -of this information. If, insufficient data exist,
generally the site should not be considered a candidate for
" de minimjg treatment. - The burden should be on the PRPS tc
provide information on volume and toxicity to back up any
claims of de miniais eligibility.
3Guidance on premium payments is provided in the "Guidance or,
Premium- Payments in CERCLA Settlements" (issued on November l~,
1988, OSWER Dir. 19835.6).
4In general, the earlier a dg mj.nlnis settlement is negotiated
in- the overall settlement/litigation process, or the greater the
site-specific uncertainty regarding remedial costs, the larger the
premium should be. Redpeners vary depending on the stage at which
the settlement ia reached and the estimated accuracy of the site
cost estimate*. In addition to the reopeners described above, at
a minimum,.there vill be a reopener for additional PRP information
gathered that may indicate that a party Is not £fi miniais and a
reservation of rights and criminal liability for natural resources
damages, unless the Federal Natural Resource Trustee has agreed in
writing to a covenant under §122 (j)' of CERCLA. Reopeners and
premiums are used to insure that the government vill minimize any
unrecovered costs. Where the remedy involves off-site disposal,
off-site redisposal liability may be a factor in determining risk
premiums. More information on premiums and reopeners is presented
in the following sections.
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o Past oo»t» have been well docum«nt»d.
o Future remedial response costs are, or can be estimateu and
appropriate premiums can be developed. Reasonable, reliable
and recent estimates for future costs should be available
before the settlement is negotiated. Where very small
contributors are involved and the site has reached the mid to
late RI/FS stage, this criterion nay be relaxed.
o One or sore viable nou-dj minimis (major) FEFs exist against
whom the government has a strong liability case. For
instance, if all PRPs would qualify for de minjisis treatment
or if no viable major PRPS exist who would be financially able
to undertake RD/RA, the site should not be considered a
candidate for a de mininjs settlement.
o De minimis PRPs have expressed interest in a settlement,
o The de ml pin is parties are well organised or can organize with
limited governmental assistance. The de p4nijj>.l_s parties, or
the non-gg mip|mis parties, should be willing to do the work
necessary to develop and evaluate settlement proposals.
Ultimately, however, the government must make the statutory
findings that such a settlement is appropriate.
VX. EVALUATIOK OF A §1 MINIMIS PROPOSAL
As indicated by the criteria for eligibility and characteristics
of potential candidates described above, to enter into a de minim is
settlement, EPA needs information on costs (past and future),
wastes (volume, toxicity) and the universe of PRPs,5
This section discusses the major aspects of de mlpJLmis settlements,
including the determinations that need to be made to define the
limits of the djg pjnj.p43 settlement and the parties eligible for
participation in it. A discussion of timing issues relevant to
settlement at various stages of tha remedial process, including
RI/FS and RD/RA, is provided. Cost recovery (post-RD/RA)
settlements and potential settlements at non-NPL removal sites will
also be discussed.
Currently, resources for de iginj,m.is settlements are contained
within th« overall budget allowance of RD/RA negotiations,
As with any negotiation process, adequate planning should provide
Parties that do not qualify as de. niniraia are not
disqualified from the use of other types of settlement tools or
settlement options.
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maximum flexibility in the review and/or development of a de
minim..
minimj.3. proposal.
J*A1IA(3EMEHT PLAN
The _ following are suggestions to be incorporated into any sit a
management planning process.
a A timeline for development of the dj| Binjpls ' case strategy,
o Details of PRP search activities required to provide
information on candidate PRPs, if necessary, and a description
of the .resources needed to carry out- these additional
activities.
o Allocation of shares, including NBAR, if appropriate,
o" Any available information on past and future costs relevant
to determination of d_e_ ntinimjs shares and premiums,
o communications and information exchange, including information
'J on communications with non-^g minimus parties related to
• potential dg iy.nJ.Hii3 settlements.
o A plan for collection of the settlement backup documentation.
Additional information on the documentation required for this
purpose is under development.
It should be noted that a particular candidate site or individual
FRF may change djg mj.nj.igig status at any time during the remedial
process with the development of new information for the site.
COMMUNICATION
During general discussions and when the determination is made that
a particular site may be a candidate for a dg mjrtiip.s settlement,
it is advantageous to communicate to all PRPs the existence of this
settlement tool. Any initial contacts with the PRPs, such as a
"kick off informational meeting following the general notice
letters, may be used to educate them as to the availability of the
different settlement tools, including da roj.nj.mjs:.
This opportunity should be used to provide the PRPs with the
information, necessary to develop an adequate d£ aJJlAftlf proposal,
including the model settlement documents and dfi rajnjmjqf guidance,
and a clear understanding of their role in the process.
6As a matter of practicality, the PRPs should be encouraged
to take on the burden of the organizational and administrative
aspects of the &s roipimis settlement process.
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De minimis settlement negotiations are expedited when the PRPs
organize themselves into steering committees.
Settlement proposals irtay be developed by the ds minimis and/or
the non-^fi fflinimis parties. A single proposal representing
the de njnipis parties' agreement, should be developed by the
de minimis steering committee . The same holds true when more
than one de gin in is steering committee exists. In unique
circumstances, e.g. , varied generator types/ information,
separate proposals may be accepted by EPA; however, this
should be the exception rather than the rule.
Non-^e. mj,nj.mis parties should be informed about any potential
de nipiittis settlement and, in the case ""of a settlement
occurring at the RD/RA negotiation stage of the remedial
process, the Region should consider whether the non~dj| m_in_im_is
parties should be given the opportunity to incorporate the de
settlement into a global remedial settlement.
This communication process will aid the case team in assessing non-
de ffljpjmi^ party concerns related to the potential settlement.
TIMING
The determination as to whether or not to pursue a de ffij.n jails
settlement at a particular point in the Superfund process is
dependent upon the case team's knowledge of the site costs.
o In limited circumstances, a removal de. minimis settlement may
be appropriate for non-time critical removal actions at non-
NPL sites. This option would provide parties meeting the
characteristics and criteria the opportunity to cashout in the
same manner as with a remedial action, except that the
covenant would not release the settling parties for any post-
removal costs or injunctive relief.
o At the early or mid-RI/FS stage, it is often difficult cr
impossible to determine with any certainty the remedy for a
particular site. These sites are not good candidates for
early df minimis settlements.
However, at a limited number of sites the basic remedy may be
relatively easily determined, and a reasonable cost estimate
based " on past experience or industry estimates may be
calculated. These cases may be considered candidates for
early de minim is settlements if the other characteristics and
7In general, however, £g minimis settlements reached at this
point may be too speculative based upon lack of sufficient.
information to characterize the site.
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criteria, are net." -An 'example of this type- of -case is a large
landfill where a cap with its components are Likely the
dictated remedy. .
Another exception to this guideline may be the very large
multi-generator case where hundreds or' moire parties with
extremely low volumes exist, the toxieities " are relatively
similar, and a large number of other parties exist. If there
are varying toxicities, this factor should be considered in
the formulation -of a modified volumetric ranking. Any
settlement would 'include a substantial premium for future
costs" and litigative risks.
A &fi BJnJjgxs proposal is more easily, developed at the ROD
stage. At this point in time, cost estimates , for the remedy
.tare available and realistic premiums may be calculated as
discussed below. This is the most < common time for a de
miims settlement.
A tiernd approach to settlements has been used as an incentive
to, de minimis parties to join a de minimi s settlement at the
RD/RA negotiation stage. Under this approach subsequent de
proposals include higher premiums,
Example: - Initial settlement proposal includes 100%
premium (i.e., multiplier of 2.0) and minimum
.,. -. reopeners (to be discussed below. ) :
" . - Second offering includes a 200% premium {i.e.,
: .' multiplier of 3.0) with more stringent
' ' , . " • reopeners ' (perhaps a --reopener for cost
_ . - - . .. -.-, overruns.)' (
* * i *
- , Third offering includes a 300% premium (i.e.,
• 'multiplier of 4.0) with .still more, stringent
reopeners.
,. i
A phased approach nay, b« used in the development of multiple
de, minimus settlements proposed at different stages of the
remedial process where there' are multiple PRPs. As multiple
negotiations would be required in this scenario, the decision
for lifting till* approach should be documented in the site
mana
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thereby eliminates the need for special notice
letters, meetings, correspondence, etc. with
these parties.
Second de. minim is settlement proposed at RD/RA
negotiation phase with all remaining eligible
parties. This provides settlement with the
bulk of the d£ minjnig PRPs.8
Third de miniinis settlement proposed at cost
recovery stage (post-RD/RA) prior to
litigation. This eliminates aspects of the
litigation such as discovery, depositions, etc.
against de gjiiiml.g parties thereby reserving
resources for pursuit of major party
recalcitrants. (If the party declined to
participate in an earlier de mininjs settlement
for which it was eligible, an additional
premium should be added to the party's
payment. )
Coat recovery °*" post-RD/RA de minimis settlements are an
option at sites with fund-financed actions or where PRPs are
implementing the RD/RA and the government is pursuing
recalcitrants for unrecovered costs. This type of settlement
may- resolve the liability of the parties to the government
prior to active litigation thereby allowing the government to
concentrate on the non-fls p>j.n;iinis party litigation. If a de
miniais settlement was offered at the RD/RA negotiation phase
,of the remedial process, a premium for the cost recovery de
settlement may be appropriate because of the parties'
earlier recalcitrance.
It is important to note that the primary goals of a <£g minirus
settlement, in most cases, are to get parties out of the case early
and eliminate the governmental resource drain of having to deal
with a large number of PRPs. Partial de rainimis settlements, i.e. ,
those which only extinguish the PRP's liability for past costs or
for removal or RI/FS costs, and not for total response actions at
the site (e.g. past costs, future response action, etc.) may pose
an excessive resource burden on the Agency, and are not the favored
approach.
""The terms of early 4$ minimi a RI/FS settlements and de.
mi,nj.m.ig settlements reached during the RD/RA negotiation phase may
differ based on such factors as additional remedy cost information,
additional response costs, and the refusal of certain dfi
parties to join the earlier settlement.
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DETERMINATION QF ELIGIBILITY
The following determinations should be made to aid in definition
of eligible dje minim is. parties for a particular site. These
'determinations are interrelated. This information should be
clearly defined in a comprehensive de minirnis proposal generally
provided by the PRPs.
o The determination of a volumetric or modified volumetric9 cut-
off including a. determination that the individual waste
contributions of the parties constitute only a minor portion
of the total site response costs. This cut-off is established
by the waste-in list such that sufficient viable major parties
remain to negotiate or litigate for the response actions at
the site. Information pertaining to the development of a
waste-in list and generator ranking is available in the
."Potentially Responsible Party Search Manual," (issued August
28, 1987, OSWER Dir. #9834. 3-1A), and in the document, "PRP
search Supplemental Guidance for Sites in the Superfund
Remedial Program" (issued June- 29, 1989, OSWER Dir. #9834,3-
o - A determination of the types of wastes disposed of such that
,a finding of "minimal in comparison" for toxicity or other
hazardous effects can be made. Even if multiple waste types
. exist at a site this should not be burdensome. As noted
above, "minimal in comparison" has been interpreted to mean
"not significantly more toxic .than". However, where a
-, ; particular class of wastes drives response costs substantially
higher than others, the party that contributed that waste type
may be disqualified or a separate allocation formula may be
necessary. A decision as to whether or not this holds true
of a particular waste should be based on the engineering
judgement of the case team. -
o A determination that the settlement- is practicable and in the
public interest. . •- .
Example* - Volumetric cut-off established at 0.8 I/generator,
, ; . . - AH parties contributed like substances (vocs) .
f • - '
» Th* total volume of waste contributed by the parties
below the 0.8%/generator cut-off is 16.84%.
9A modified volumetric cut-off may incorporate differing
toxicities of hazardous substances contributed by the parties. A
non-binding allocation of responsibility, or NBAR, may be useful
in developing a modified ranking of PRPs.
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. i • -. .
There are sufficient liable and viable parties above
the 0.8% cut-off with which to pursue settlement or
litigation for the remaining activities at the site,
This example assumes like toxicities for all waste contributions.
Preparation
When the Agency or PRP determines that they cannot allocate 100%
of the costs through other settlement tools, another option is the
use of a non-binding allocation of responsibility (NEAR) , The
purpose of an NBAR is to establish a consistent measure for
attributing liability to the PRPs. This process requires
assembling and assessing the necessary technical and enforcement:
information that can support allocation formulas based on
volumetric contribution, nature of the waste and response cost.
The development of an NBAR should provide for a fair and equitable
allocation of liability at the site among existing PRPs.
Allocation of non-viable parties and orphan shares should be
adjusted to disperse the liability among the viable PRPs.
Additional information on the preparation of an NBAR is available
in EPA's "Interim Guidelines for Preparing Nonbinding Preliminary
Allocations of Responsibility", (issued Hay 27, 1987, QSWER Dir,
#9839.1, published on Hay 28, 1987 at 52FR19919) .
COSTS
EPA should provide cost information to the PSPs for use in the
proposal development. Estimated future remedial costs should te
calculated and accurate past cost information and documentation
should be available. This cost information is used to develop and
allocate shares, including' a premium component.
These costs will include both direct and indirect costs (plus
interest for past costs) for:
o Pre-RI/FS costs (generally removals)
o RI/FS and ROD
o RD/RA
o Oversight costs
o OSN costs
o Contingency for unknown future costs
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PSEMiM
The purpose of premiums is to, cover '..the risk of underestimating
response costs and of not recovering 100% of EPA'.s outstanding
costs from parties not- eligible for or not joining in the de
settlement.10 There is no set .formula for .determining
*
.
premiums, however, and the case team must* rely on sound engineering
and legal judgement. The November 17, 1988 "Guidance on Premium
Payments in CERCLA Settlements," (OSWER- pir, #9835~,6) , provides
general information on premiums.' Premium, payments* may be
calculated on the parties1 volumetric shares, as augmented by the
distribution of orphan shares to, the volumetric shares,
- r •
One important consideration is a premium for future costs (this
includes all costs that have not been incurred,', including cost
overruns during performance of RD/RA and costs relating to unknown
circumstances) . This premium should be based on whether or not a
remedy has been selected, the project manager's engineering
judgement of potential problems with a selected remedy,, potential
cost overruns for the project, and where the remedy involves off-
site disposal and any risk of off-site disposal liability. This
analysis is conducted by the RPM or OSC with input from appropriate
technical support personnel. It 'must be documented. The
availability of the information required to determine this premium
is critical to the timing of a &g minimia settlement.
CALCULATIQN OF PRP SHARE
o The actual dollar amount of each PRP's share is .generally
1 calculated in the following manner^ For each generator:
1. • Multiply the generator's percentage (.volumetric r
redistributed orphan share, including non-viable parties)
by the total past costs. .
•• 2. Multiply the generator's percentage (as above with
redistributed orphan share added) by total estimated
future costs. - '
3. Multiply '21 above by the premium. (A percentage premium
is equivalent to a multiplier premium, e.g., 40% equals
0.4. A premium of 40% would provide a multiplier of 0.4,
1001 would equal 1.0.)
10The future coats include the costs of remediating Known
conditions, the risk that costs will exceed the expected costs of
the cleanup of known conditions, the costs of remediating
conditions not known when a remedy is selected, and, if the site
will require five year reviews, the uncertainty of changing
standards and technologies.
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4, Add '!», '2', and '3« above to arrive at individual
. ' generator's cost share.
EXAMPLE
Past Costs * $1,000,000
(removal, RI, FS costs to date,. other pre-remedial costs,
enforcement activities, indirect costs, and interest)
Future Estimated Costs » $30,000,000
(remaining FS, RD, RA, oversight, O&M, future contingencies)
Premium « 75%
(based on uncertainties including remedy failure, etc.)
Generator A . geperatgg §
volumetric share
orphan share
total percentage
past costs (% X cost)
future costs (% X cost)
premium (premium % X future)
total payment (past +•
0.5%
flUl
0.6%
$ 6,000
$180,000
$135,000
$321,000
0.9%
ikll
1.1%
$ 11,000
$330,000
$247,500
$588,500
future •«• premium)
REOPENERS
In addition to premiums, a variety of reopeners have been used in
d_e ainimii settlements. Reopeners allow the government to revisit
the settlement according to the particular terms of the reopener.
The standard reopeners are briefly summarized as follows.
First, to protect the Agency against the possibility that a de
party's full waste contribution to the site has not been
discovered, de. n4n4ai3 settlements should include a reservation of
rights which allows the government to seek further relief from any
settling party if information not known to the government at the
time of settlement is discovered which indicates that the volume
or toxicity criteria for the sites 's 4fl ffiAM.mjj.i parties is no
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longer satisfied with respect to".that party.
r,
Second, unless covered by a. premium, a reopener should generally
be included which protects the Agency against the risk of cost
overruns during the completion of the remedial action specified in
the ROD, This reopener would generally be written as a cost
ceiling, which, if exceeded, would allow the government to seek
additional relief from the settling -parties*. ''
- .Third, unless covered by*a premium;-a reopener should generally be
, included 'which protects the Agency from the risk that further
response action will be necessary in addition .to the work specified
in the ROD. This reopener would state that the government may seek
• .further relief from the settling parties if EPA determines, based
upon conditions at the site, previously unknown to EPA, or
information received, in whole -or in -"part, after [entry of the
( .consent decree/issuance of the AO], that the remedial action is not
protective of public health and the environment.
In addition to the de ainimis-specific reopeners noted above, le
minimis settlements must also include reservations of rights for:
1) any liability as a result of the settling parties' failure to
comply with the terms of the settlement; 2) any liability for
natural resource damages (unless the Federal natural resource
trustee has agreed to a covenant not to sue); 3)- criminal
liability? 4) any liability for any claim'or cause of action not
expressly included within the covered matters or within the
covenant not to sue? 5) any liability which any non-settling party
may have for any claim or cause of action.
SETTLEMENT OPTIONS
The. following settlement options are .also available when
considering a de minimis settlement proposal:
o Alternative settlement offers may be advantageous" in providing
• •' settlement options to a large variety of PRPs, This option
entails the use of 2 similar offerings with , the 'only
difference being in the premium and reopener sections. Some
PRPs ar* more willing to cashout at a higher premium to
resolv* all CERCLA liability, while other parties would rather
r pay * lower premium and Have broader reopeners. such an
offaxing provides incentive to both "interests" while still
satisfying *h* government's risks. A single or separate
.. settl«m«nt documents may be used in this case.
•'' Exaaples Offer 1 - premium of 200% with minimum reopeners
(i.e., new information on waste contributed to the
.; - ' • site, natural resource damages},. "
. Offer 2 - same document (no premiums if there are
. ' - full reopeners), with minimum reopeners (i.e. new
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information on the waste contributed to the site,
natural resource damages) and standard reopeners
(i.e., cost overruns during sonpletion of remedial
action, and unknown conditions/new information
indicating that remedial action is not protective) .
o A percentage-based settlement may be agreed upon. In this
case, the parties agree to pay a percentage of actual past and
future expenditures. This option has not been used to date;
however, it is an acceptable settlement tool. Before using
this settlement option, however, the Region should consider
the financial viability of the settling parties (i.e., will
they still exist at the time the delayed payments are due) and
the administrative cost to the Agency of sending out multiple
bill- ings to many PRPs,
Example: Settling party agrees to pay their volumetric share
plus a 10% premium for future liability. The
parties will be billed at the conclusion of RD, and
at various stages during the RA. They would also
normally majce an upfront payment toward past costs.
There are also options available for formalizing the agreement in
a settlement document.
o The de mynj.ii> is settlement may be embodied in a global
settlement with the non-£s ilajffijg settling PRPs. This
agreement would be in a consent decree for the RD/RA. Many
times this also provides for the PRPs assumption of future
liability for the de. mjLnimis parties' share of the work in
exchange for receipt of a premium from the dg n4nj.m_is parties.
If there is a global settlement where the de pinliis settlers
provide funds to the major generators, EPA must verify that
the
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VII. NEGOTIATIONS AND SETTLEMENT
The negotiations required for a' 4g mlQlmjs settlement should not
be resource .intensive. The model consent decree and model order
provide useful language for the drafting of a site specific decree
or -order. Negotiations should involve the entire case team, and
the appropriate Headquarters and DOJ personnel should be informed
about upcoming negotiations. The June 17, 1988 "Revision of CERCLA
Civil Judicial Settlement Authorities Under Delegations 14-13-B and
. 14-14-E" provides for delegation of Section l22(g)(l)(A)
settlements with generators with Headquarters concurrence required
for the first case in each Region unless otherwise exempted from
delegation by the June 17, 1988 revision (such as settlements which
are inconsistent with national policy) . Headquarters consultation
will be retained for subsequent cases. DOJ approval is required
for all de minim is consent decrees and for ds min im i s
administrative consent orders concerning sites at which total past
and projected future response costs exceed $500,000, excluding
interest. (See §122 (g) (4),) If DOJ approval is required, the OOJ
staff attorney should be contacted early in the development of the
case strategy to allow for DOJ participation in the development of
the settlement terms. -
r . , ' ' i .
The most common document used when finalizing a dje tnjnimis
settlement separately from an RD/RA settlement is an administrative
order on, consent.
i '
The settlement may be embodied in a separate, de minlmis only,
consent decree. This option is * generally used when there is
ongoing litigation at the site,, ' -
In addition to these options, de minimis -parties may, if
appropriate, be offered the option to 'join any non-de roinir. is
settlement in lieu of participating in a sle rajJiimis settlement.
Of QE MINIMI^ MQNIpfi
In most cases, a &fi minimis settlement is a "cashout". Therefore,
the case team must consider the disposition of "ca shout" monies.
If the "cashout" i» a jjfi minimis settlement and is part of a global
•Section 123 »«ttl«iB*nt, it may be appropriate to provide the future
cost component and its related premium to the parties implementing
"the response action as provided for in Section 122 (g) (5} , However,
the settl«n receiving "eashout" funds must assume the liability
of the da alpimis parties contributing the monies.
If the non-dj| m,j.nimia parties ara not expected to settle or are not
settling within a short time frame, the 'total settlement dollars
will go to the Trust Fund or be divided between the Trust Fund and
the state, if the state is a party to the settlement and has a
response cost claim.
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If the "cashout11 includes a past cost component, these monies are
to be counted as cost recovery and deposited for credit to the
invested portion of the Trust Fund. The future cost component and
the premium component nay be held in several ways which provide for
fund conservation and where possible the accrual of interest on the
settlement funds:
1) When immediate fund accessibility is not necessary, the
dollars should be deposited for credit to the invested
portion of the Trust Fund for later appropriation to the
Agency,
2} At State-lead sites, the dollars can be deposited to a
state managed escrow account or trust fund, where
safeguards exist that ensure that the money will be used
for the specific site response.
3} When EPA will be responsible for implementing the
response action or will be transferring funds to other
settlers and immediate fund accessibility is essential,
the dollars should be deposited for credit to the non-
invested portion of the Trust Fund. A site specific
"special account" will be established.
4) When a global settlement is expected, the dollars say be
temporarily deposited to a court managed escrow account
for future distribution to major settlers. Court managed
accounts should not be utilized for long term funds
management.
5) For global settlements reached between de minimis and
non-^s mji\iifll3. parties, the dollars can be deposited to
an EPA approved but PRP established and managed trust
fund or escrow account.
PURPOSE MTO 088 OF THIS GUIDANCE
This i guidance and any internal procedures adopted for its
implementation are intended solely as guidance for employees of the
U.S. I Environmental Protection Agency. They do not constitute
rulemakin^by the Agency and may not be relied upon to create a
rightj or b«Mfit, substantive or procedural, enforceable by law or
in equity, ~by any person. The Agency may take action at variance
with this guidance or its internal implementing procedures.
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. . _. GUIDAMCB DOCUMENTS
s,
"Interim Guidelines : for Preparing Nonbinding Preliminary
Allocation* of-Responsibility" - (issued Hay 20, 1987,.OSWER. Dir.
#9839.1 - published on May 28, 1987 at 52FR19919).
"Interim Guidance on Settlements with D_e_ MinimJ.s Waste Contributors
"under Section 122{g) of SARA" - (issued June 19, 1987, OSWER' Dir.'
#9834.7 - published on June 30, 1987 at 52FR24333).
"Interim Model CERCLA Section 122(g)(f) 2S: Minimis Waste
Contributor" Consent Decree and Administrative Order on Consent" -
(issued on October 19, 1987, OSWER Oir. 19834.7-1A - published on
November'12, 1987 at 52FR43393).
"Guidance on Premium Payments in CERCLA Settlements" - (issued on
November 17, 1988, OSWER Dir. #9835.6 - Porter/Adams).
"Guidance.on Landowner Liability under Section 107(a) (l) of CERCLA,
Dg Minimis Settlements under Section 122"(g) (i) (B) of CERCLA, and
Settlements with Prospective Purchasers of Contaminated Property" -
(issued on June 6, 1989, OSWER Dir. #9835.9 - published on August
18, 1989 at 54FR34235). .
"Compendium of CERCLA Response/ Selection Guidance Documents" -
OWPE - - : ,
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