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Round 2-2: Expedited Settlements


Reform Description
EPA announced the expedited settlement reform in 1995 to reduce transaction costs for all potentially responsible parties (PRPs) at Superfund sites through early settlements. The reform was designed to:
  • Encourage early (i.e., pre-ROD) de minimis settlements;
  • Encourage ability to pay settlements with de minimis PRPs who demonstrate they cannot pay their full share of response costs; and
  • Give PRPs the opportunity to nominate other PRPs who they believe are also responsible for site cleanup.

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Reform Status
check mark Implementation of this reform is complete.

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Results
At the conclusion of FY98, EPA had settled with a total of 1339 de minimis parties, resulting in recovery of approximately $22.5 million. From the pilots' inception through the end of FY98, EPA achieved early de minimis settlements at eight pilot sites, ability to pay settlements at 5 pilot sites, and solicited nominations of additional PRPs.

The early de minimis settlements were achieved at the following sites: From the pilot's inception, ATP settlement were achieved with a total of 23 parties: 20 at the Solvents Recovery Site; one at the Tulalip Landfill site; one at the Arcanum Iron & Metal site; and one at the Hansen Containers site.

During FY98, EPA also added three new efforts to track the progress of these pilots:
  1. Determine the feasibility of pre-ROD settlements;
  2. Evaluate the lessons learned from these pilots; and
  3. Examine which aspects of this reform should be incorporated into the existing Superfund Enforcement Program.
Through the conclusion of FY01, EPA had settled out over 27,000 de minimis parties, under 500 settlement agreements. As a result of this reform, EPA has incorporated lessons learned and produced new guidance (see Documents below).

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Lessons Learned
After over three years of piloting expedited settlements, the cumulative lessons learned and recommendations are as follows:

EPA should routinely and proactively encourage pre-ROD de minimis settlements. The advantages of such settlements are:
  • Such settlements resolve the liability of these parties early in the process and avoid future transaction costs.
  • Funds from these early settlements can be used to attract other PRPs (notably the PRPs who clean up the site) to settle with EPA.
  • Such settlements make future enforcement actions by EPA more manageable for EPA and the remaining PRPs.
  • Pre-ROD de minimis settlements, if done properly and fairly, can generate positive feedback from all PRPs -- both de minimis and non-de minimis PRPs.
Some features of successful expedited settlements are:
  • Regions should plan to do significant work early in the cleanup process to identify the de minimis PRPs and to craft an appropriate strategy for them.
  • As early as possible, Regions should obtain good, reliable information on the identity and contributions of each PRP. This includes obtaining good data on the type and volume of waste contributed by each PRP to the site.
  • Regions should obtain credible and accurate information on the costs of likely future response actions, to use as a basis for a de minimis settlement and provide PRPs with such information.
  • Regions should proactively solicit interest in early de minimis and ability to pay settlements.
  • PRPs should be involved in the de minimis identification process (EPA makes the ultimate decision on whether a PRP is a de minimis party for that site).
  • Regions should make sure that PRPs understand pre-ROD de minimis settlements, their benefits and risks, and the premium payment provision. It is especially important to make those PRPs who are not generally knowledgeable about CERCLA understand these aspects of expedited settlements.
  • Regions should ensure that any PRPs who believe that they are not financially able to pay their full share of any de minimis settlement know that EPA is willing to consider them for an ability to pay settlement and know what information they must provide EPA to establish their limited ability to pay situation.
  • Regions should be aware that some PRPs may choose not to enter into a settlement with EPA before the Agency has selected the response action. The PRPs may feel that paying a share of the estimated costs of a yet-to-be-selected response action plus a premium is too risky for them and they may prefer to wait to negotiate any settlement until EPA decides on a response action.
  • As early as possible in the process, Regions should employ a nomination process to give identified PRPs the opportunity to nominate other parties as PRPs. EPA will then have time to include such nominated PRPs, should they qualify and choose to be included, in an early de minimis settlement.
Finally, EPA believes that de minimis settlements can be achieved at removal sites, especially at those sites with non-time-critical removal actions. Regions should use the time while planning the removal action to also attempt to achieve an early de minimis settlement.

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Success Stories
Solvent Recovery Services, Southington, CT

At the Solvent Recovery Services site, EPA settled with 945 de minimis parties, resulting in recovery of approximately $7.3 million. EPA was also able to achieve two goals of the reform at this pilot: early de minimis settlement and ability to pay settlement. [FY98 Success]

Tulalip Landfill, Marysville, WA

EPA settled with 207 de minimis parties, resulting in recovery of approximately $10.0 million at the Tulalip Landfill site (see also the ROD update data sheet). All three goals of the reform were achieved at this remedial pilot: early de minimis settlement, ability to pay settlement, and nomination of additional parties. [FY98 Success]

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Documents
Title: Fact Sheet: Existing Ability to Pay Guidance and Models
Date: May 1995
Document #: NTIS PB96-185442
Synopsis: The purpose of this fact sheet is to identify and briefly describe the documents relevant to Superfund ability to pay (ATP) analysis. This fact sheet summarizes: 1) general policy documents that require or provide for consideration of the ability to pay of Superfund parties; and 2) documents that describe methods to determine ability to pay settlement amounts.

Title: General Policy on Superfund Ability to Pay Determinations
Date: September 30, 1997
Document #: NTIS PB97-199731
Synopsis: The main text of this document addresses general issues that apply to ATP processes and settlements. The document also contains two appendices that address issues specific to making ATP determinations for individuals and businesses.

Title: Revised Model CERCLA Section 122(g)(4) De Minimis Contributor Administrative Order on Consent
Date: September 29, 1995
Document #: 60 FR 62849-62858
Synopsis: The model, which supersedes the October 19, 1987, interim model, provides guidance for EPA and DOJ staff when negotiating de minimis contributor administrative orders on consent.

Title: Revised Model CERCLA Section 122(g)(4) De Minimis Contributor Consent Decree
Date: September 29, 1995
Document #: 60 FR 62849-62858
Synopsis: The model, which supersedes the October 19, 1987, interim model, provides guidance for EPA and DOJ staff when negotiating de minimis contributor judicial consent decrees.

Title: Standardizing the De Minimis Premium Date: July 7, 1995 Synopsis: This guidance document establishes presumptive premium figures, describes the most likely basis for deviating from such figures, and recommends a method for effectively communicating the premium determination process to the de minimis settlers and other interested parties at a site.

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