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Note: The United States (Claimant), on behalf of the Environmental Protection Agency (EPA), sued CTS Corporation, Mills Gap Road Associates, and Northrop Grumman Systems Corporation (Settling Defendants), seeking reimbursement for the costs associated with removing Trichloroethylene contamination from the property owned by Settling Defendants and the surrounding area. Claimant asked for specific performance from the Settling Defendants, consistent with the amended National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Part 300 and injunctive relief pursuant to §106 of the Comprehensive Environmental Response, Compensation, and Liability Act as amended (“CERCLA”), 42 U.S.C. § 9606.Under 42 U.S.C. §9622 (d), Claimant and Settling Defendants entered into a Consent Decree. The United States District Court for the Western District of North Carolina, Howell, Magistrate Judge, approved the settlement between Claimant and the Settling Defendants.

Settling Defendants were required to provide USD 9,035,000 in financial assurance as part of the Consent Decree to cover the estimated costs of cleaning the property. The Magistrate Judge stated that Settling Defendants could use several methods to secure financial assurance, including “surety bonds guaranteeing payment, letters of credit, trust funds, and/or insurance policies”. Regarding the use of a letter of credit, the opinion cited existing EPA financial assurance requirements, which calls for, “an irrevocable letter of credit, payable to or at the direction of EPA, that is issued by an entity that has the authority to issue letters of credit and whose letter-of-credit operations are regulated and examined by a federal or state agency”.

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