Jump to main content or area navigation.

Contact Us

Superfund


   

Round 3-11: Orphan Share Compensation




Reform Description
This reform is intended to provide greater fairness, reduce litigation, and promote faster cleanup of Superfund sites. It is a fundamental and permanent change in EPA's enforcement process.

An orphan share is the financial responsibility assigned to a potentially responsible party (PRP) who is insolvent or defunct, and unaffiliated with other viable liable PRPs. Orphan share compensation provides a major incentive for responsible parties to perform cleanups and settle claims quickly without litigation, and reduces transaction costs by wholly or partly resolving the question of who should bear the burden of orphan shares.

The "Interim Guidance on Orphan Share Compensation for Settlors of Remedial Design/Remedial Action and Non-Time-Critical Removals," issued in June 1996 (see Documents below), accomplishes these goals in a manner that preserves the limited resources of the Trust Fund. Under this policy, the Agency compensates parties who agree to perform a remedial action or non-time-critical removal at a NPL site, for some or all of the costs specifically attributable to insolvent or defunct PRPs. Compensation can be up to 25 percent of either the response costs or the total past and future oversight costs, whichever is less, but cannot exceed the estimated orphan share.

In 1997, EPA and the Department of Justice expanded the orphan share reform. The September 30, 1997, policy statement entitled "Addendum to the 'Interim CERCLA Settlement Policy' Issued on December 5, 1984" describes factors for the government to consider when deciding whether and how much to compromise a cost recovery claim based on the existence of a significant orphan share. In addition, the addendum provides that where there is a significant orphan share in a cost recovery case, the orphan share may be considered as an "inequity" or "aggravating factor" within the meaning of the "Interim CERCLA Settlement Policy," and justifies EPA's recovery of less than 100 percent of response costs. The Agency will consider, on a case-by-case basis, cost recovery settlement offers which provide a compromise based on an orphan share.

Because of this increased flexibility, parties who wish to submit private party allocations may do so in the context of either work or cost recovery settlement negotiations, thereby obviating the need for the Agency to maintain, as a separate reform, Reform 3-15, Adopting Private Party Allocations.

[Back to Top]


Reform Status
check mark Implementation of this reform is complete.

EPA will continue to offer orphan share compensation at all eligible sites.

[Back to Top]


Results
As a result of this reform, EPA:
  • In June 1996, issued interim final guidance on orphan share compensation.

  • In September 1997, EPA issued addendum to expand orphan share compensation to cost recovery settlements.

  • During FY03, EPA offered $5.2 million in orphan share compensation at 9 negotiations during FY03 for a total of $235 million in orphan share compensation at 160 negotiations across the United States between FY96 - FY03.

ORPHAN SHARE COMPENSATION
Through Fiscal Year
Cumulative Offers
Cumulative Dollar Amount
2003
160
$235 million
2002
151
$230.3 million

[Back to Top]


Success Stories
Interstate Lead Company (ILCO) Site, Leeds, AL

In FY97 at the ILCO site, EPA entered into a settlement with 20 financially viable generators for site cleanup valued at $59.4 million, and reimbursement of $1.8 million of $16.6 million in outstanding response costs. As part of the settlement, EPA contributed $14.8 million in outstanding response costs, or 25 percent of the estimated remedy cost. This compromise was based on EPA's offer in FY96 to compensate settling work parties in recognition of the orphan share. [FY97 Success]

Operating Industries, Inc. Landfill, Monterey Park, CA

In FY97, EPA offered orphan share compensation in the amount of $15 million to 270 major potentially responsible parties associated with the Operating Industries, Inc. Landfill site. The offer is conditional upon the parties' commitment to conduct the remaining cleanup activities at the site. The total cost of cleanup activities at the site is estimated at $217 million. The settlement offer would compensate settling parties for the entire amount of the orphan share if a settlement to perform work is reached. [FY97 Success]

Chemsol, Inc., Piscataway, NJ

In FY99 at the Chemsol site, EPA offered orphan share compensation in the amount of $2.4 million as incentive for parties to perform work valued at approximately $20 million at the former chemical recycling plant. The Agency reached a settlement agreement with approximately 30 parties to perform the cleanup of soils and groundwater contaminated with volatile organic compounds, PCBs, and lead. As a part of the settlement, EPA waived the payment of $2.4 million in past costs in recognition of a defunct owner/operator.

[Back to Top]


Documents
Title: Memorandum: Revised Orphan Share Compensation Reform Questions and Answers
Date: February 2, 2001
Synopsis: This memorandum accompanies the "Revised Orphan Share Compensation Reform Questions and Answers" and transmits a set of revised guidance that summarizes the Agency's practice related to orphan share compensation in cost recovery negotiations. Title: Revised Orphan Share Compensation Reform Questions and Answers
Date: January 2001
Synopsis: This document describes a policy intended to enhance fairness and encourage potentially responsible parties (PRPs) to agree to perform cleanups at contaminated sites. Title: Memorandum: Model Language Relating to Orphan Share Compensation Through the Compromise of Future Oversight Costs
Date: September 28, 2000
Synopsis: This memorandum suggests model language for inclusion in future RD/RA consent decrees and administrative orders on consent for removal actions that provide orphan share compensation through the compromise of future oversight costs. Title: Memorandum: Transmittal of Addendum to the "Interim CERCLA Settlement Policy" Issued on December 5, 1984
Date: September 30, 1997
Document #: NTIS PB98-103138
Synopsis: This addendum describes factors for the government to consider when deciding whether and how much to compromise a cost recovery claim based on the existence of a significant orphan share. Title: Fact Sheet: Orphan Share Reform -- EPA Increasing Fairness in the Enforcement Process
Date: June 4, 1996
Synopsis: This fact sheet outlines EPA's provisions for increasing fairness in the enforcement process. These guidelines will maximize available compensation for performing cleanups.

Title: Interim Guidance on Orphan Share Compensation for Settlors of Remedial Design/Remedial Action and Non-Time-Critical Removals
Date: June 3, 1996
Document #: NTIS PB96-180476
Synopsis: This guidance document provides for orphan share compensation where: 1) EPA initiates negotiations for remedial design/remedial action (RD/RA) or a non-time-critical (NTC) removal at an NPL site, and a PRP or group of PRPs agree to conduct the RD/RA or NTC removal under consent; and 2) an orphan share exists at the site.

[Back to Top]


Solid Waste and Emergency Response Home | Superfund Home | Innovative Technologies Home