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Types of Superfund Settlements

The following information was taken from EPA's internet on June 21, 2012. 

 

Types of Superfund Settlements

EPA negotiates cleanup agreements with potentially responsible parties (PRPs). These agreements are in the form of administrative orders on consent, administrative agreements, or judicial consent decrees.

Negotiations are based on model settlement documents, which can be modified to fit site circumstances.

Administrative Orders on Consent
Administrative Agreements
Judicial Consent Decrees
Agreements for "Work"
Cost Recovery Agreements
"Cashout" Agreements

 

Administrative Orders on Consent

Administrative Orders on Consent (AOCs) are legal documents that formalize an agreement between EPA and one or more PRPs to address some or all of the parties' responsibility for a site.

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 orders on consent do not require approval by the court.

Administrative Agreements

Administrative Agreements are legal documents 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.

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Judicial Consent Decrees

Consent Decrees (CDs) are legal agreements 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 CD 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).

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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.

All types of cost recovery and cashout agreements may be done as CDs.

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