Exhibit 16

Case 3:14-cv-01772-MO Document 33-30 Filed 04/10/15 Page 1 of 9
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UNITEDSTATESE.NVIRONMENTAL PROTECTIONAGENCY 1 .. !. ,/.-. ' ' WASHI~GTON.D.C. m6o ... . 

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. . .. June 3, 1996 .. 

. . . . OFFICEOF ' 

ENFORCEMEKT ab 

MAY 1'8.1999 , '1 

COMPLIANCE ASSURANCE .. 

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WMORANDUM , I .

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., SUBJECT:, Interim Guidance on,Orphan Share Compensation for Settlers of 

' FROM: ." StevenA.He ssistanf Administrator 

Office of Enforcement kd Compliance Assurance . . 

. , I . . .' TO: .Regional Administrators, I-X . . 

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This memorandum trahsmie the "Interim Guidance on Orphan Share Compensation'for 

Settlors of Remedial Desigflemedial Action and yon-Time-Critical Removals." This guidance 

provides Regions with further.direction to address orphan share compensation in Superfund 

settlements. 

On October 2, 1995, Administrator Browner announced the third in a series of refoims 

designed to fundamentally change.the'way EPA'implements the Superfund program. .This . . 

orphan'share guidance is the latest installment in the Clinton'Administration's commi,tment to' 

refonn Superfund ,andprovide greater fairness, reduce litigation and promote faster cleanup of 

Superfund sites. One of the cornerstones of the October announcement is the Agency's initiative 

to exercise its enforcement discretion to provide orphan share compensation at sites where parties 

' agree to perform the cleanup. .. . , . 

' This guidance strikes a balance between the budgetary constraints of a,lapse in Superhnd ,. taxing authority and the desire'to'provide'meaningfulreform consistent with the . ,' \ . Administration's legislative proposals. In fiscal year 1996 alone, 'the Administration is prepared' 

to offer over $50 million in orphan share compensation to potentialsettlement parties. , ' . . . 

For further information concerning this guidance, please contact either Susan Boushell 

(202-564-5107) or Patricia Moa (202-564-5133) in the Office of Site Remediation Enforcement. 

Case 3:14-cv-01772-MO Document 33-30 Filed 04/10/15 Page 2 of 9
cc: Elliott Laws, Assistant Administrator for Solid Waste and Emergency Response . I Lois Schiffer, Assistant Anomey General, DOJ . '. '0 

Jerry Clifford,'Director, 0ffice.of Site Remediation Enforcement ' ', 

Steve Lufig, Director, Office ofEmergency and Remedial Response . Director, Ofice of Site Remediation ,and Restoration, Region I 

.Director, Emergency'and Remedial Response Division, Region I1 

. . Director, Hazardou,W&te M'magement,Division, Regions 111, IX , , . 

, . ' ' Director, Waste Management DiVision, Region IV i 

, , Director,, , Superfund Division,' Regions'V, VI, VI1 j(, . 

Assistant,Regiond,Administrator, Office of Ecosystems Protection and . I

: Remediation, Region VI11 

Director,'Enviro~entalCleanup Ofice; Region X , ', 

.Regional Counsel, ,RegionsI-X 

,' Lany Starfield, Associate General Counsel,,OGC ": 

Joh Cruden, Deputy Assistant Attomey General, DOJ' 

Joel Gross; Chief, Environmental Enforcement Section; DOJ ,. . 

,. , , Bruce Gelber, Principal'Deputy Chief, Environmental Enforcement Section, DOJ , , ,. 

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INTERIM GUIDANCE ON ORPHAN SEIARE COMPENSATION 

FOR SETTLORSOF REMEDIAL DESIGN/ REMEDIAL ACTION AND 

NON-TIME-CRITICAL REMOVALS I -

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, . UNITED STATES ENVIRONMENTAL PROTECTION AGENCY ' 

. 401 M Street, S.W: 

Washington, D.C.20460 

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'' ISTEFUM GUIDAA'CE ON ORph S& CO'MPENSATIONFOR SETTLORs OF 

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Policv Statement and PurDo'se - .. . 

On October.2, 1995,Administrator Browner announced the &ird in a series ofreforms 

designed to fundamentally change .theway EPA implements'the Superfund program. Several of . '

- these Superfund,Reforrns are intended,to provide .greaterfairness, reduce litigation and 

dsaction costs, and promote private party cleanup of Superfund sites. .One of the cornerstones 

of the October announcement was the Agency's initiative to exercise its enforcement discretion 

to provide orphan share compensation at sites where potentially responsible pkes (PRPs) agree , , . . to perform the cleanup. '. .. . 

The purpose of this interhguidance is to provide Regions.with further direction for 

providing orphan share compensation in settlements with Pes. This guidance makes clear that, 

where EPA determines that there is a share which may be equitably attributed to,partieswho are 

insolvent or defimct (i.e..the "orphan share") and which would ordinarily be allocated to viable. . : 

PRPs under principles ofjoint and several liability, EPA intends to consider this factor in its 

assessment of the federal compromise it provides in settlement.' EPA anticipates that its 

willingness to contribute to settlement, based in part upon an increased,emphasison the effect of' 

an orphan sliare, will facilitate settlement with performingparties. ~. .. .. 

Of course, the Region's consideration of an "orphan' share" is only one component of a 

Region's settlement analysis. Consistent with OUT historic practice, the total amount of federal 

compromise in settlement incorporates o$er factors in addition to the presence or absence of an 

. orphari share, including: (1) litigation or other risks to recovery or performance; (2) cooperation , 

of performing parties; arid (3) the'resources of parties. This'guidance simply establishes limits 

. ' ,uponthe amokts the Regions may provide as orphan share compensation in light of current. 

fiscal limiiations. his' policy preserves.the application of common law tort principles of joint .. 

and several liability by recogriizing the impact ofjoint and several liability in the settlement 

andysis factors where EPA determines that an orphan share at a given site may be greater than 

&minimis. .. , . . ,. . , 

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. , .. , , , . ' This guidance is intended,for settlement purposes only and; therefore, orphan share . . compensation is appropriate only where settlement occurs. In the event that settlement does not '

,'occur, Regions should, as appropriate, pursue PWs jointly and severally for their performance of. . cleanup and recovery of response costs. Courts have uniformly found that CERCLA liability is 

joint and several where the harm is indivisible,'which ensures that the costs of cleanup'are borne 

by'the..?&-ties who contributed to the contamir ation, rather than the tax-paying public. This 

guidancedoes not apply where EPA determines or a court finds that PRPs have met their ' ' 

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sabstantial burden of proving as a defense to joint .and several liability that the hh is divisible I , ' . . and rcasonably capable of apportionment. '. I 

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~. Under CERCLA's joint and severdliability system, at sites where there &e insolvent or , . 

defimct parties who cannot contribute.to the cost ofcleanup, viable PRPs are required to absorb 

1 . the shares that may be attributable to such non-viable PRPs. h'aneffort to mitigate this effect 

and encourage PRPs to perform cleanup, EPA committed in the October 1995 announcement to 

compensate performing parties,for a limited portion of the orphan share in fudre cleanup 

, . settlements. The Agency stated that.this compensation might be accomplished through ,: 

'_ , forgiveness of past costs and'of projected oversight costs, and would necessarily be,subject to the , ,

j' amount of funding available for the program. , ,' 

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' . Since the October announcement however, Congress has not reauthorized Supehnd, nor . 

has it provided the Agency with a separate appropriation for orphan share compensation. In 

, ,addition,.Congresshe not yet reinstated the Superfund'pxing authority -Ithe principal source of 

revenue for the Superfund Trust Fund --,which expiied at the,end of 1995. Until.these taxes.are . ' 

reinstated, the TrusfFund will continue to be.dep1eted by costs expended to implement the. . . program and achieve.cleanups. Because of this lapse in taxing authority aqid absence'ofspecific ,. orphan share funding in'the FY-96 appropiation,.EPA examined.ways,tocompensate a,poition , . 

.I , ' of the orphan share within existing appropriations. ' . .. . . ., 

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EPA also determined that it was important td provide incentives for pdes to voluntarily 

perfod cleahups, provide the benefits of this reform to as many qualifying sites possible, .. recognize cooperative parties,'keep transaction costs low,,and use readily available information. ., 

Finally, the Agency.wants to provide appropriate balance.betweenpreserving the Trust Fund and . . 

.providingmeaningful implementation of this reform. Based on these considerations, ,EPA 

.. developed a process that would enable the Regions to implemeht this'reform this fiscal year. , I 

, Amlicability , , I ... , 

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.. 2 'This guidance is not intended to apply at sites where th'e only PRPs at,the site'c&ently . ' . 

' , or formerly owned or operated 'the facility or'at federal facilities. ., .. . . 

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share and its ability to pay; or (3) those parties,’such & ‘:de micromi? contributors, municipal 

.solid waste (MSW) co’ntributors or’certainlenders or residential homeowners, that EPA would. 

not ordinarily pursue’for)cleanup COS^ See ‘Policy on CERCLA Enforcement ,AgainstLenders 

and Government Entities that ‘Acquire Property Involuntarily” (Sept. 22, 1995); “Policy Toward 

Owners of Property Containing Contaminated Aquifers” (May 24, 1995); “Guidance,on 

‘CERCLASettlements with De.Micromis Waste Contributors,” OSWER Directive NO. 9834.17 

(July 30, 1993); “Policy Toward Owners of Residential Property” (July 3,1991); “Interim Policy 

on CERCLA Settlements Involving Municipalities and Municipal Wastes” (Dec. 6, 1989). . ’ 

. . . . 

A party may be co’mideredto be “insolvent” if EPA determines that a party has no ability - to pay. A party may be considered to be “defunct” iE (1) the entity has’ceasedto exist or ceased 

‘operations;and (2)the entity has fully dissipated its assets such that the party hkno abi!ity to 

pay. For both the’insolvent and the defimct determinations, EPA’s investigation must indicate 

that there is no successor or’otheraffiliated party.. that is potentially liable. , 

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‘Methodsfor‘Deterrninine Auuronriate Orphan Share ComDonent of Federal Compromise , 

Compensation for the orphan share component of the federal compromise in settlement. 

may be provided through forgiveness of past costs and reduction of Iiability for future oversight 

costs? At some sites, forgiveness.of some portion of past costs already may have occuked in 

conjunction with a prior settlement with PRPs at the site. In such cases, those past costs which 

have been forgiven would not be’availablefor use ascompensation under this reform with . . I 

respect to the same PRPs. 

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.. .. ... . . To determine the appropriate 0rph.m share component of the federal compromise at a 

particular site, Regions should.make a rough estimate of the size of the orphan share. At many 

sites, an estimated range will be sufficient.to determine whether the sh&e which may be 

equitably amibuted to insolvent and defunct pkes warfan& federal compromise. Using total , 

site costs,’ Regions should estimate the orphan share’based upon equitable factors, such bs the 

Although mixed funding rkight have been used as’compensationmderthis reform, ’ ’ 

EPA did not receive a separate appropriation for orphan share compensation and;therefore, any ’ . ’ a , 

mixed funding provided under ‘thisrefoim;would,have reduced the,funds available for’cleanups. 

As a result, compensation under this reform does.not include’mixed funding. Howeyer, this’ 

guidance is notintended to modify or alter EPA’s enforcement discretion to enter into mixed 

’ funding agreements under Section I22(b).of CERCLA, 42 U.S.C. 3 9622@). . , 

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!:“Total site costs’: refer to outstanding past costs and future,oversight costs at the site .-. or

opera%leunit that is thesubject of the ROD or NTC removzl ‘&d projected ROD or NTC ’ I ’ 

. . removal costs. , , 

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Gore factors.' Toenkurethat implementation of this,refomi does not impede cleanup, cause a . .' . , delay in statutoryriegotiation deadlines, or result in increased &ansaction costs,'Regions should 

relyupon readily available or easily obtainable information in making this estimation. .. , . 

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' ' . ' compromisi under this policy. 

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However, in limited circumstances, 

. ' . Regions may, in their.discretion, decide that compensation less thanthe maximum amount is 

appropiiate after consideration of equitable factors, including: (1) PW faimess to other PWs, 

including'small businesses, MSW.paities, small volume waste contributors and certain lenders 

And homeowners; (2) PW cooperation; and (3) size of the orphan share.. Regions should give 

! . issuance of this guidance. . . ."- .. 

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,, ' ' . The "Gore factors'' are usually relied upon by courts in making,equitableallocations in ' ' contrib;ution.actions.They include: (1.) the amount of hazardous substances involved; (2) the . . degree of toxicity of the substances; (3) the degree of involvement by parties in the generation, 

transportation, treatment, storage, or disposal of the substances; (4) the degree'of'c&e exercised 

.by the parties with respect to the substances; and (5)the degree of cooperation of the parties with 

' . idve%ent officials to pre;ent any.hann to public health or the enGronment. See. e.&. End. , 

. . TransD. Sews. v:Ensco. Inc.;969 F.2h 503 (7th.Cir. 1992). ; 

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Implenientation .. 

'When proyidGg notice of forthcoming negotiations to.PRPs or dphg on-going ., 

negotiations, Regions should indicate whether the site is eligible for this reform and should share 

any available information about the maximum amount appropnate for compensation. Regions , 

-mayrequest PRPsto submit information regarding the size ofthe orphan share,at the site, 

including a basic rationale and 'supporting documentation. 

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Headquarters pre-approval will be required for any ,settlement at a site where the 

.projected ROD remedy.or NTC removal cost.exceeds $30 million. To satisfy this pre-approval' 

requirement, $Regions:shouldcontact Headquarters, either orally or in writing, prior to conveying 

a formal settlement offer to a-PRPor group of PRPS that includes an orphan'share compensation 

component Headquarters willthen evaluate such proposed compensation in light of site-specific 

factors, state concerns and national p,norities, including meiningful implementation of the reform 

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and impact on the Trust Fund. ,~ .. , .. . . . . 

For all sites, analysis of the proposed orphan share compensation provided through ' . . ' 

. forgiveness of past costs rind reductiori of liability for future oversight costs should be included ' 

in the enforcement .codidenti&ten-point settlement analysis submitted to Headquarters. This ., , 

'&dance is not intended to limit EPA's consideration of other settlement factors. The Regions , 

may elect to compromise a greater or lesser aniount than that described herein, basedupon other 

'factors they would consider in their routine settlement aalyses, such as litigation or other risks 

I to recovery or peiformance;. cooperation . . of the performing parties;hd the resources of parties. 

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.. We have established ah oIphan share assistance team with the Department of Justice to .' 

.assist Regions in implementation of this importkt reform.. The team will be in contact with . ' , . Regional staffto,resolveissues to ensure results. - . . 

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For further information concerning this guidance, please contact either Susan:Boushell 

(202-564-5 107) or Patricia,Mott (202-564-51333 in the Office of Site Remediation Enforcement. . 

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Purnose and Use of this Guidance .

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This guidance and any intemal procedures adopted for its implementation are'intended -, ' , ,

exclusively as guidance for employees of the US.Environmental Protection Agency. ,This,', .

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guidance is not a %le and does not create any legal obligations. Whether and how.EPA applies . . 

.the guidance to any.paflicular site will depend on the facts at the site. ' . I 

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