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Negotiating Superfund Settlements

EPA prefers to reach an agreement with a potentially responsible party (PRP) to clean up a Superfund site instead of issuing an order or paying for it and recovering the cleanup costs later.

Superfund settlement agreements must be:

  1. In the public interest, and
  2. Consistent with the National Contingency Plan.

A special notice letter invites a PRP to enter into good faith negotiations and gives the PRP 60 days to provide EPA with a good faith offer to do site work or pay for cleanup. If the PRP provide a good faith offer, there is generally another 60 days for negotiation. If the PRP does not submit a good faith offer at the end of 60 days, EPA may start the cleanup work or issue a unilateral administrative order, requiring the PRPs to do the work.

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Types of Superfund settlement agreements

A Superfund cleanup agreement is written in the form of an administrative order on consent or a judicial consent decree. Negotiations are based on model settlement agreements, which are usually modified to fit the circumstances at a particular site. Model settlement documents and other information are available from the Superfund cleanup policy and guidance database.

Superfund settlement agreements consist of the following type of documents :

Administrative Order on Consent

An Administrative Order on Consent (AOCs) is a legal document that formalize an agreement between EPA and one or more PRP to address some or all of the parties' responsibility for a site. Administrative orders on consent do not require approval by the court.

EPA uses AOCs for

  • removal activity (short-term cleanup),
  • investigation, and
  • remedy design work.

EPA also uses AOCs for cost recovery when the payments are made as part of an agreement for work and for de minimis cashout payments.

Administrative Agreements

An administrative agreement is a legal document that formalize an agreement between EPA and one or more PRPs to reimburse EPA for costs already incurred (cost recovery) or for costs to be incurred (cashout) at a Superfund site. (Cashout settlements generally include payments for both past and future costs, but always include a future cost component.)

Administrative agreements do not require approval by the court. All types of payment agreements that do not include performance of work are generally written as administrative agreements.

Judicial Consent Decrees

A Consent Decree (CD) is a legal agreement entered into by the United States (through EPA and the Department of Justice) and PRPs and lodged with a court.

Consent decrees are the only settlement type that EPA can use for the final cleanup phase (remedial action) at a Superfund site. EPA also uses CDs to recover cleanup costs in cost recovery and cashout settlements and on rare occasions to perform removal work or remedial investigations/feasibility studies.

A consent decree is final when it is approved and entered by a U.S. district court.

Agreements for "Work"

EPA prefers that PRPs do the work of investigating, cleaning up, and maintaining the cleanup of Superfund sites. EPA negotiates an agreement (in the form of an AOC or CD) with the PRP that outlines the work that is to be done.

The term “work agreement” is used to cover a variety of agreements that involve the PRP doing the work (versus EPA doing the work). The most common agreements are for:

  • site investigation (remedial investigation and feasibility study),
  • short-term clean up (removal action), and
  • long-term cleanup (remedial design / remedial action).

Cost Recovery Agreements

When EPA performs investigations or cleanup work, it can recover these costs from PRPs through a cost recovery agreement.

When an agreement only addresses reimbursing EPA costs, it is referred to as a Cost Recovery Agreement and takes the form of an Administrative Agreement.

Administrative orders on consent for work may include a provision for the PRP to reimburse EPA for past work costs and will include a provision for the PRP to pay EPA's future costs in overseeing the PRPs' work (considered "cost recovery" because such costs are billed to PRPs after they are incurred).

"Cash out" Agreements

There are a few situations when it is more appropriate for PRPs not to be involved in performing work at a site. In such cases, EPA may negotiate a "cash out" agreement with the PRP, where the PRP pays an appropriate amount of estimated site costs in advance of the work being done. That money will be used to help pay for the clean up.

Agreements to cash out de minimis PRPs are done as AOCs, and agreements to cashout peripheral and other ability to pay parties are done as administrative agreements.

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Long-Term Stewardship/Institutional Controls in Superfund Settlements

Superfund settlement agreements usually include long-term stewardship obligations to maintain the cleanup. Long-term stewardship activities typically include physical and legal controls to prevent exposure to contamination left in place at a site. For example, a groundwater cleanup may involve operating a treatment system for 30 or more years. At such a site, a legal control such as a groundwater use regulation may be used to meet the long-term stewardship obligation.

The legal controls are generally referred to as "institutional controls." EPA uses institutional controls to help:

  • minimize human exposure to contamination, and
  • protect structures and systems that are part of the cleanup (such as groundwater monitoring systems and landfill covers).

Institutional controls are considered part of the remedy for the site. How institutional controls are enforced depends on the nature of the control and how it is initiated (e.g., through a local ordinance; in an enforceable agreement).

EPA continually assesses the status of ICs at Superfund sites and gathers IC data from construction complete Superfund sites.

Examples of IC's include:

  • easements
  • covenants
  • zoning restrictions
  • well drilling prohibitions
  • special building permit requirements
  • deed restrictions
  • state or local ordinances
  • deed or hazard notices
  • state registries of contaminated properties
  • restrictions on groundwater use

Further information on institutional controls is available on the Institutional Controls web page and from the institutional controls category within the Superfund enforcement policy and guidance database.

Learn More about Negotiating Superfund Settlements:

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