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Enforcement

Superfund Cost Recovery

If EPA does the cleanup work using Superfund money, it will try to recover those costs from responsible parties. The Agency must document all its cleanup costs, including direct expenses (e.g., salary and contractual) and indirect expenses (e.g., overhead). Cleanup costs related to any work performed by contractors must indicate that the work was authorized and completed. Further, cost documentation must show that the costs were actually incurred and paid for by the government.

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Types of Superfund Response Costs
Type Overview
Direct costs Expenses directly traced to a particular activity, such as a cleanup action. These costs can include the following expenses incurred by EPA and the cleanup contractor: time spent on a cleanup-related activity, travel to and from the site, contractor costs at the site, and equipment used at the site, etc.
Contractors' annual allocation costs Money spent by government contractors doing site-related work not traceable to a particular site. For example, training in handling hazardous materials. This training is essential to Superfund cleanup site work, but the training received may be used at several sites. On an annual basis, government contractors allocate these costs across the sites that they have worked on during the past year. The contractor provides EPA with a site-specific allocation of the cost and EPA treats them as direct costs.
Indirect costs Indirect costs are EPA's expenses for managing the Agency. These costs are not directly traceable to any particular cleanup activity and may include costs associated with: administrative matters, personnel issues, guidance development, and office, utility, and supply costs, etc. EPA developed a complex methodology for allocating these costs among all of the activities accomplished during a year.

EPA decides to pursue cost recovery based on several factors, including:

  • Strength of liability evidence,
  • Financial strength of potentially responsible parties (PRPs),
  • The amount of money to be recovered.

As a matter of policy, EPA sends a written demand letter to PRPs prior to filing a cost recovery lawsuit. The demand letter requests that the PRPs reimburse the Superfund Trust Fund for a specified amount and triggers the accrual of prejudgement interest on the costs sought by EPA.

PRPs will generally attempt to negotiate the extent of their liability for the cleanup costs owed to EPA. If a PRP agrees to reimburse EPA for its costs, the resulting settlement may be documented in a judicial consent decree or in an administrative settlement.

EPA tracks the amount owed by PRPs in its accounting system. Generally, a PRP has a certain period of time in which to pay the amount owned. When a payment is overdue EPA, or if a PRP refuses to reimburse EPA for its costs, or if a settlement agreement cannot be reached, the Department of Justice (DOJ) will file a cost recovery action in court. During the course of a cost recovery action, EPA periodically updates the amount it is seeking to adjust for: additional cleanup work conducted by EPA, legal costs incurred by EPA and DOJ, and The interest accrued on the amount sought.

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Costs that Can be Recovered

EPA may recover all of its costs that are "not inconsistent" with the National Contingency Plan (NCP). Examples of costs that the courts have found are recoverable include:

  • Planning and implementing cleanup actions
  • Investigation and monitoring
  • Actions to limit access to the site
  • Indirect costs needed to support the cleanup work
  • EPA's contractor costs
  • Annual allocation costs

Private parties may recover costs that are "consistent" with the NCP. EPA pursues both the costs it has accrued before settlement ("past costs") and costs it anticipates accruing after the settlement ("future costs"). EPA may deposit costs recovered through settlements into "special accounts" within the Superfund Trust Fund to pay for cleanup activities at the site for which it received the money.

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Statute of Limitations on Cost Recovery

The statute of limitations is the amount of time EPA, states, and private parties have to take action in court to recover their costs. There is some variation, depending on site-specific factors, but generally the following statute of limitations applies:

Action Statute of Limitation
Removal Action Initial action to be commenced within 3 years after the completion of the removal action
Remedial Action Initial action to be commenced within 6 years after initiation of physical on-site construction of the remedial action
When the Remedial Action is initiated within 3 years of completion of the Removal Action Removal costs may be recovered within 6 years of physical on-site construction of the remedial action (9 years after the completion of the removal action)
Subsequent Action May be brought at any time, but no later than 3 years after the completion of all response action.

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