Financial Assurance in Superfund Settlements

Financial assurance helps ensure that responsible parties, and not public funding sources, bear the financial burden of completing Superfund cleanups.

EPA negotiates financial assurance requirements in its Superfund settlements and orders. The settlements and orders generally require potentially responsible parties (PRPs) to demonstrate adequate financial ability to complete the cleanup work that they are obligated to perform.

More specifically, the financial assurance mechanisms supplied by PRPs typically provides EPA with a source of funds that the Agency can use to ensure funding for cleanup work in the event EPA ever needs to “take over” the work under the relevant settlement or order.

Section 108(b) of Superfund statute authorizes EPA to require that classes of facilities maintain financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances. EPA has issued two Federal Register notices identifying classes of facilities for which the Agency may develop Superfund financial assurance requirements. More information on financial assurance regulatory notices is available from the Superfund Financial Responsibility web page.

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Superfund Financial Assurance Mechanisms

Permissible Superfund financial assurance mechanisms consist of:

  • Trust Funds,
  • Letters of Credit,
  • Surety Bonds,
  • Insurance Policies,
  • Corporate Financial Tests, and
  • Corporate Guarantees.

Other mechanisms that may be used in specific circumstances include deposit accounts, escrow accounts, certificates of deposit, and liens against real property.

Recent EPA guidance documents are intended to improve and standardize practice in the financial assurance area. Sample financial assurance instruments and documents that Superfund PRPs can use to demonstrate financial assurance are available on the financial assurance category of the Superfund enforcement policy and guidance database.

Superfund Financial Assurance versus RCRA Financial Responsibility

EPA promulgated financial responsibility regulations for closure and post-closure of Resource Conservation and Recovery Act (RCRA) treatment, storage, and disposal facilities in 1982. Although the RCRA regulations are often used as guidelines or points of comparison, they are not binding and not always entirely relevant in the context of Superfund financial assurance.

The primary sources of guidance for Superfund financial assurance requirements are the sample instruments and documents referenced above, as well as the financial assurance section of EPA’s Model Consent Decree for CERCLA Remedial Design/Remedial Action.

Learn More: Superfund Alternative Approach

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