[Federal Register Volume 63, Number 32 (Wednesday, February 18, 1998)]
[Notices]
[Pages 8197-8201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4007]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-5967-6]


Announcement and Publication of the Policy for Municipality and 
Municipal Solid Waste; CERCLA Settlements at NPL Co-Disposal Sites

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: This policy supplements the ``Interim Policy on CERCLA 
Settlements Involving Municipalities and Municipal Wastes'' (1989 
Policy) that was issued by the U.S. Environmental Protection Agency 
(EPA) on September 30, 1989. This policy states that EPA will continue 
its policy of not generally identifying generators and transporters of 
municipal solid waste (MSW) as potentially responsible parties at NPL 
sites. In recognition of the strong public interest in reducing 
contribution litigation, however, EPA identifies in the policy a 
settlement methodology for making available settlements to MSW 
generators and transporters who seek to resolve their liability. In 
addition, the policy identifies a presumptive settlement range for 
municipal owners and operators of co-disposal sites on the NPL who 
desire to settlement their Superfund liability.
FOR FURTHER INFORMATION CONTACT: Leslie Jones (202-564-5123) or Doug 
Dixon (202-564-4232), Office of Site Remediation Enforcement, 401 M. 
St, S.W., 2273A, Washington, D.C. 20460. This policy is available 
electronically at http://www.epa.gov/oeca//osre.html. Copies of this 
policy can be ordered from the National Technical Information Service 
(NTIS), U.S. Department of Commerce, 5285 Port Royal Road, Springfield, 
VA 22161. Each order must reference the NTIS item number PB98-118003. 
For telephone orders or further information on placing an order, call 
NTIS at (703) 487-4650 or (800) 553-NTIS. For orders via E-mail/
Internet, send to the following address: [email protected].


[[Page 8198]]


    Dated: February 5, 1998.
Steven A. Herman,
Assistant Administrator, Office of Enforcement and Compliance 
Assurance.

Policy for Municipality and Municipal Solid Waste CERCLA Settlements at 
NPL Co-Disposal Sites

I. Purpose

    The purpose of this policy is to provide a fair, consistent, and 
efficient settlement methodology for resolving the potential liability 
under CERCLA 1 of generators and transporters of municipal 
sewage sludge and/or municipal solid waste at co-disposal landfills on 
the National Priorities List (NPL), and municipal owners and operators 
of such sites. This policy is intended to reduce transaction costs, 
including those associated with third-party litigation, and to 
encourage global settlements at sites.
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    \1\ The Comprehensive Environmental Response, Compensation and 
Liability, 42 U.S.C. 9601, et seq.
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II. Background

    Currently, there are approximately 250 landfills on the NPL that 
accepted both municipal sewage sludge and/or municipal solid waste 
(collectively referred to as ``MSW'') and other wastes, such as 
industrial wastes, containing hazardous substances. These landfills, 
which are commonly referred to as ``co-disposal'' landfills, comprise 
approximately 23% of the sites on the NPL. Many of these landfills were 
or are owned or operated by municipalities in connection with their 
governmental function of providing necessary sanitation and trash 
disposal services to residents and businesses.
    EPA recognizes the differences between MSW and the types of wastes 
that usually give rise to the environmental problems at NPL sites. 
Although MSW may contain hazardous substances, such substances are 
generally present in only small concentrations. Landfills at which MSW 
alone was disposed of do not typically pose environmental problems of 
sufficient magnitude to merit designation as NPL sites. In the Agency's 
experience, and with only rare exceptions do MSW-only landfills become 
Superfund sites, unless other types of wastes containing hazardous 
substances, such as industrial wastes, are co-disposed at the facility. 
Moreover, the cost of remediating MSW is typically lower than the cost 
of remediating hazardous waste, as evidenced by the difference between 
closure/post-closure requirements and corrective action costs incurred 
at facilities regulated under Subtitles D and C of the Resource 
Conservation and Recovery Act, 42 U.S.C. 6901, et seq. (RCRA).
    On December 12, 1989, EPA issued the ``Interim Policy on CERCLA 
Settlements Involving Municipalities and Municipal Wastes'' (the 1989 
Policy) to establish a consistent approach to certain issues facing 
municipalities and MSW generators/transporters. The 1989 Policy sets 
forth the criteria by which EPA generally determines whether to 
exercise enforcement discretion to pursue MSW generators/transporters 
as potentially responsible parties (PRPs) under Sec. 107(a) of CERCLA. 
The 1989 Policy provides that EPA will not generally identify an MSW 
generator/transporter as a PRP for the disposal of MSW at a site unless 
there is site-specific evidence that the MSW that party disposed of 
contained hazardous substances derived from a commercial, institutional 
or industrial process or activity. Despite the 1989 Policy, the 
potential presence of small concentrations of hazardous substances in 
MSW has resulted in contribution claims by private parties against MSW 
generators/transporters.
    Additionally, the 1989 Policy recognizes that municipal owners/
operators, like private parties, may be PRPs at Superfund sites. The 
1989 Policy identifies several settlement provisions that may be 
particularly suitable for settlements with municipal owners/operators 
in light of their status as governmental entities.
    Consistent with the 1989 Policy, the Agency will continue its 
policy to not generally identify MSW generators/transporters as PRPs at 
NPL sites, and to consider the performance of in-kind services by a 
municipal owner/operator as part of that party's cost share settlement. 
In recognition of the strong public interest in reducing the burden of 
contribution litigation, however, this policy supplements the 1989 
Policy by providing for settlements with MSW generators/transporters 
and municipal owners/operators that wish to resolve their potential 
Superfund liability and obtain contribution protection pursuant to 
Section 113(f) of CERCLA.

III. Definitions

    For purposes of this policy, EPA defines municipal solid waste as 
household waste and solid waste collected from non-residential sources 
that is essentially the same as household waste. While the composition 
of such wastes may vary considerably, municipal solid waste generally 
is composed of large volumes of non-hazardous substances (e.g., yard 
waste, food waste, glass, and aluminum) and can contain small amounts 
of other wastes as typically may be accepted in RCRA Subtitle D 
landfills. A contributor of municipal solid waste containing such other 
wastes may not be eligible for a settlement pursuant to this policy if 
EPA determines, based upon the total volume or toxicity of such other 
wastes, that application of this policy would be 
inequitable.2
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    \2\ For example, such other wastes may not constitute municipal 
solid waste where the cumulative amount of such other wastes 
disposed of by a single generator or transporter is larger than the 
amount that would be eligible for a de micromis settlement.
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    For purposes of this policy, municipal solid waste and municipal 
sewage sludge are collectively referred to as MSW; all other wastes and 
materials containing hazardous substances are referred to as non-MSW. 
Municipal sewage sludge means any solid, semi-solid, or liquid residue 
removed during the treatment of municipal waste water or domestic 
sewage sludge, but does not include sewage sludge containing residue 
removed during the treatment of wastewater from manufacturing or 
processing operations.
    The term municipality refers to any political subdivision of a 
state and may include a city, county, town, township, local public 
school district or other local government entity.

IV. Policy Statement

    EPA intends to exercise its enforcement discretion to offer 
settlements to eligible parties that wish to resolve their CERCLA 
liability based on a unit cost formula for contributions by MSW 
generators/transporters and a presumptive settlement percentage and 
range for municipal owners/operators of co-disposal sites.
MSW Generator/Transporter Settlements
    For settlement purposes, EPA calculates an MSW generator/
transporter's share of response costs by multiplying the known or 
estimated quantity of MSW contributed by the generator/transporter by 
an estimated unit cost of remediating MSW at a representative RCRA 
Subtitle D landfill. This method provides a fair and efficient means by 
which EPA may settle with MSW generators/transporters that reflect a 
reasonable approximation of the cost of remediating MSW.
    This policy's unit cost methodology is based on the costs of 
closure/post-closure activities at a representative RCRA Subtitle D 
landfill. EPA's estimate of the cost per unit of remediating MSW at a 
representative

[[Page 8199]]

Subtitle D landfill is $5.30 per ton.3 That unit cost is 
derived from the cost model used in EPA's ``Regulatory Impact Analysis 
for the Final Criteria for Municipal Solid Waste Landfills,'' 
(RIA).4
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    \3\ This rate will be adjusted over time to reflect inflation.
    \4\ PB-92-100-841 (EPA's Office of Solid Waste and Emergency 
Response); see also RIA Addendum, PB-92-100-858.
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    To calculate the unit cost, the Subtitle D landfill cost model was 
applied to account for the costs associated with the closure/post-
closure criteria of part 258 5 (excluding non-remedial 
costs, such as siting and operational activities) for two types of cost 
scenarios: basic closure cover requirements at a Subtitle D landfill; 
and closure requirements supplemented by a typical corrective action 
response at a Subtitle D landfill. Based on the costs associated with 
those activities, EPA developed a cost per ton for each scenario. In 
recognition of EPA's estimate that approximately 30-35% of existing 
unlined MSW landfills will trigger corrective action under part 
258,6 EPA used a weighted average of both unit costs to 
develop a final unit cost. Specifically, EPA averaged the unit costs 
giving a 67.5% weight to the basic closure cover unit cost and a 32.5% 
weight to the multilayer cover and corrective action scenario. The 
resulting unit cost, $5.30 per ton reflects (as stated in the Subtitle 
D RIA) is the likelihood that unlined MSW landfills, such as those 
typically found on the NPL, would trigger corrective action under part 
258.
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    \5\ Part 258 is the set of regulations that establish landfill 
operation and closure requirements for RCRA Subtitle D landfills.
    \6\ See Addendum to RIA at II-12 n. 13.
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    In applying the RIA model to develop unit costs, EPA used the 
average size of co-disposal sites on the NPL, 69 acres. Other landfill 
assumptions from the RIA that EPA used in running the model include the 
following: a 20-year operating life (also consistent with the average 
NPL co-disposal site operating life); 260 operating days per year; a 
below-grade thickness of 15 feet with 50 percent of waste below grade; 
a compacted waste density of 1,200 lb/cy;7 and a landfill 
input of 289.3 tons per day.8 The present value cost is 
calculated assuming a 7 percent discount rate.
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    \7\ September 22, 1997 memo to the file by Leslie Jones 
(conversation with Dr. Robert Kerner, Drexell University, head and 
founder of the Geosynthetic Institute).
    \8\ The RIA model calculates a ton per day input of 289.3 based 
on the 69-acre size, the waste density factor of 1200 lb.cy, and a 
total of 5200 operating days during the life of the landfill.
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    When seeking to apply the unit cost to parties' MSW contributions, 
in some cases a party's contribution is quantified by volume (cubic 
yards) rather than weight (pounds). Absent site-specific 
contemporaneous density conversion factors, Regions may use the 
following presumptive conversion factors that are representative of 
MSW. MSW at the time of collection from places of generation (i.e., 
``loose'' or ``curbside'' refuse) has a density conversion factor of 
100 lbs./cu. yd.9 MSW at the time of transport in or 
disposed by a compactor truck has a density conversion factor of 600 
lbs./cu. yd.10 In cases involving municipal sewage sludge, a 
party's contribution may first be converted from a volumetric value to 
a wet weight value using a water density of 8.33 lbs./gallon 
11 and the specific gravity of the municipal sewage 
sludge.12 The wet weight may then be converted to a dry 
weight using an appropriate value for the percentage of solids in the 
municipal sewage sludge. These conversion factors, in conjunction with 
the unit cost, can be used to develop a total settlement amount for the 
MSW attributable to an individual party.
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    \9\ ``Estimates of the Volume of MSW and Selected Components in 
Trash Cans and Landfills'' (Feb. 1990), prepared for the Council for 
Solid Waste Solutions by Franklin Associates, Ltd.; ``Basic Data: 
Solid Waste Amounts, Composition and Management Systems'' (Oct. 
1985--Technical Bulletin #85-6), National Solid Waste Management 
Association.
    \10\ Id.
    \11\ ``Final Guidance on Preparing Waste-in Lists and Volumetric 
Rankings for Release to Potentially Responsible Parties (PRPs) Under 
CERCLA'' (Feb. 22, 1991), OSWER Directive No. 9835.16.
    \12\ Specific density is determined by dividing the density of a 
material by the density of water.
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    In order to be eligible for a settlement under this policy, an MSW 
generator/transporter must provide all information requested by EPA to 
estimate the quantity of MSW contributed by such party. EPA may solicit 
information from other parties where appropriate to estimate the 
quantity of a particular generator's/transporter's contribution of MSW. 
Where the party has been forthcoming with requested information, but 
the information is nonetheless imperfect or incomplete, EPA will 
construct an estimate of the party's quantity incorporating reasonable 
assumptions based on relevant information, such as census data and 
national per capita solid waste generation information.
    MSW generators/transporters settling pursuant to this policy will 
be required to waive their contribution claims against other parties at 
the site. In the situation where there is more than one generator or 
transporter associated with the same MSW, EPA will not seek multiple 
recovery of the unit cost rate from different generators or 
transporters with respect to the same units of MSW. EPA will settle 
with one or all such parties for the total amount of costs associated 
with the same waste based on the unit cost rate. Notwithstanding the 
general requirement that settlors under this policy must waive their 
contribution claims, a settlor will not be required to waive its 
contribution claims against any nonsettling non-de micromis generators 
or transporters associated with the same waste. However, in regards to 
these individual payments for the same MSW, EPA will not become 
involved in determining the respective shares for the parties.
    It is an MSW generator's or transporter's responsibility to notify 
EPA of its desire to enter into settlement negotiations pursuant to 
this proposal. Absent the initiation of settlement discussions by an 
MSW G/T, EPA may not take steps to pursue settlements with such 
parties.
Municipal Owner/Operator Settlements
    Pursuant to this policy, the U.S. will offer settlements to 
municipal owners/operators of co-disposal facilities who wish to 
settle; those municipal owners/operators who do not settle with EPA 
will remain subject to site claims by EPA consistent with the 
principles of joint and several liability, and claims by other parties.
    EPA recognizes that some of the co-disposal landfills listed on the 
NPL are or were owned or operated by municipalities in connection with 
their governmental function to provide necessary sanitation and trash 
disposal services to residents and businesses. EPA believes that those 
factors, along with the nonprofit status of municipalities and the 
unique fiscal planning considerations that they face, warrant a 
national settlement policy that provides municipal owners/operators 
with settlements that are fair, reasonable, and in the public interest. 
As discussed below, EPA has based the policy on what municipalities 
have historically paid in settlements at such sites.
    This policy establishes 20% of total estimated response costs for 
the site as a presumptive baseline settlement amount for an individual 
municipality to resolve its owner/operator liability at the site. 
Regions may offer settlements varying from this presumption consistent 
with this policy, generally not to exceed 35%, based on a number of 
site-specific factors. The 20% baseline is an individual cost share and 
pertains solely to a municipal owner/operator's liability as an owner/
operator. EPA recognizes that, at some

[[Page 8200]]

sites, there may be multiple liable municipal owners/operators and EPA 
may determine that it is appropriate to settle for less than the 
presumption for an individual owner/operator. A group or coalition of 
two or more municipalities with the same nexus (i.e., basis for 
liability) to a site, operating at the same time or during continuous 
operations under municipal control, should be considered a single 
owner/operator for purposes of developing a cost share (e.g., two or 
more cities operated together in joint operations; in cost sharing 
agreements; or continuously where such a group's membership may have 
changed in part). In cases where a municipal owner/operator is also 
liable as an MSW generator/transporter, EPA may offer to resolve the 
latter liability for an additional payment amount developed pursuant to 
the MSW generator/transporter settlement methodology.
    Under this policy, EPA may adjust the settlement in a particular 
case upward from the presumptive percentage (generally not to exceed a 
35% share) based on consideration of the following factors:
    (1) Whether the municipality or an officer or employee of the 
municipality exacerbated environmental contamination or exposure (e.g., 
the municipality permitted the installation of drinking water wells in 
known areas of contamination); and
    (2) Whether the owner/operator received operating revenues net of 
waste system operating costs during ownership or operation of the site 
that are substantially higher than the owner/operator's presumptive 
settlement amount pursuant to this policy.
    The Regions may adjust the presumptive percentage downward based on 
whether the municipality, of its own volition (i.e., not pursuant to a 
judicial or administrative order) made specific efforts to mitigate 
environmental harm once that harm was evident (e.g., the municipality 
installed environmental control systems, such as gas control and 
leachate collection systems, where appropriate; the municipality 
discontinued accepting hazardous waste once groundwater contamination 
was discovered; etc.). The Regions may also consider other relevant 
equitable factors at the site.
    The 20% baseline amount is based on several considerations. EPA 
examined the data from past settlements of CERCLA liability between the 
United States, or private parties, and municipal owners/operators at 
co-disposal sites on the NPL where there were also PRPs who were 
potentially liable for the disposal of non-MSW, such as industrial 
waste. EPA excluded from analysis sites where the municipal owner/
operator was the only identified PRP because those are not the types of 
situations that this policy is intended to address. Thus, settlements 
under this policy are appropriate only at sites where there are 
multiple, viable non-de minimis non-MSW generators/transporters. EPA's 
analysis of past settlements indicated an average municipality 
settlement amount of 29% of site costs.
    In reducing the 29% settlement average to a 20% presumptive 
settlement amount, EPA considered two primary factors. First, in 
examining the historical settlement data, EPA considered that the 
relevant historical settlements typically reflected resolution of the 
municipality's liability not only as an owner/operator, but also as a 
generator or transporter of MSW. Under this policy, a municipality's 
generator/transporter liability will be resolved through payment of an 
additional amount, calculated pursuant to the MSW generator/transporter 
methodology.
    Second, the owner/operator settlement amounts under this policy 
also reflect the requirement that municipal owners/operators that 
settle under this policy will be required to waive all contribution 
rights against other parties as a condition of settlement. By contrast, 
in many historical settlements, municipal owners/operators retained 
their contribution rights and hence were potentially able to seek 
recovery of part of the cost of their settlements from other parties.

V. Application

    This policy applies to co-disposal sites on the NPL. This policy is 
intended for settlement purposes only and, therefore, the formulas 
contained in this policy are relevant only where settlement occurs. In 
addition, this policy does not address claims for natural resource 
damages.
    This policy does not apply to MSW generators/transporters who also 
generated or transported any non-MSW containing a hazardous substance, 
except to the extent that a party can demonstrate to EPA's satisfaction 
the relative amounts of MSW and non-MSW it disposed of at the site and 
the composition of the non-MSW. In such cases, EPA may offer to resolve 
the party's liability with respect to MSW as provided in this policy at 
such time as the party also agrees to an appropriate settlement 
relating to its non-MSW on terms and conditions acceptable to EPA.
    EPA does not intend to reopen settlements with the U.S., nor does 
this policy have any effect on unilateral administrative orders (UAOs) 
issued prior to issuance of the policy. At sites for which prior 
settlements have been reached but where MSW parties are subject to 
third party litigation, the U.S. may settle with eligible parties based 
on the formulas established in this policy and may place those 
settlement funds in a site-specific special account. At sites where no 
parties have settled to perform work, where the U.S. is seeking to 
recover costs from private parties, and where the private parties have 
initiated contribution actions against municipalities and other MSW 
generators/transporters, the U.S. will seek to apply the most 
expeditious methods available to resolve liability for those parties 
pursued in third-party litigation, including, in appropriate 
circumstances, application of this policy. EPA may require settling 
parties to perform work under appropriate circumstances, in a manner 
consistent with the settlement amounts provided in this policy.
    Because one of the goals of this policy is to settle for a fair 
share from MSW generators/transporters and municipal owners/operators, 
EPA will consider in determining a settlement amount under this policy 
any claims, settlements or judgments for contribution by a party 
seeking settlement pursuant to this policy. In no circumstances should 
a party that receives monies from contribution settlements in excess of 
its actual cleanup costs receive a benefit from this policy.
    The United States will not apply this policy where, under the 
circumstances of the case, the resulting settlement would not be fair, 
reasonable, or in the public interest. Regions should carefully 
consider and address any public comments on a proposed settlement that 
questions the settlement's fairness, reasonableness, or consistency 
with the statute.

VI. Financial Considerations in Settlements

    In cases under this policy, EPA will consider all claims of limited 
ability to pay. EPA intends in the future to develop guidelines 
regarding analysis of municipal ability to pay. Parties making such 
claims are required to provide EPA with documentation deemed necessary 
by EPA relating to the claim, including potential or actual recovery of 
insurance proceeds. Recognizing that municipal owners/operators often 
are uniquely situated to perform in-kind services at a site (e.g., 
mowing, road maintenance, structural maintenance), EPA will carefully 
consider any forms of in-kind services that a municipal owner/

[[Page 8201]]

 operator may offer as partial settlement of its cost share.

VII. Use with Other Policies

    This policy is intended to be used in concert with EPA's existing 
guidance documents and policies (e.g., orphan share, de micromis, 
residential homeowner, etc.), and so other EPA settlement policies may 
also apply to these sites. For example, those parties eligible for 
orphan share compensation under EPA's orphan share policy will continue 
to be eligible for such compensation.13
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    \13\ The orphan share policy will continue, however, to apply 
towards total site costs and not an individual settlor's settlement 
share.
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VIII. Consultation Requirement

    The first two settlements in each Region reached pursuant to this 
policy require the concurrence of the Director of the Office of Site 
Remediation Enforcement (OSRE). All subsequent settlements with 
municipal owners/operators at co-disposal sites require the concurrence 
of the Director of OSRE. If you have any questions regarding this 
policy please call Leslie Jones (202) 564-5123 or Doug Dixon (202) 564-
4232.

    Notice: This guidance and any internal procedures adopted for 
its implementation are intended exclusively as guidance for 
employees of the U.S. Government. This guidance is not a rule and 
does not create any legal obligations. Whether and how the United 
States applies the guidance to any particular site will depend on 
the facts at the site.

[FR Doc. 98-4007 Filed 2-17-98; 8:45 am]
BILLING CODE 6560-50-P