Indemnification or Defense, or Providing Notice to the Department of Defense, Relating to a Third-Party Environmental Claim, 34471-34477 [2018-15487]

Agencies

• DEPARTMENT OF DEFENSE
• Office of the Secretary

[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)]
[Rules and Regulations]
[Pages 34471-34477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15487]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 175

RIN 0790-AJ54
[Docket ID: DOD-2016-OS-0108]


Indemnification or Defense, or Providing Notice to the Department 
of Defense, Relating to a Third-Party Environmental Claim

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The DoD is identifying the proper address and notification 
method for an entity making a request for indemnification or defense, 
or providing notice to DoD, of a third-party claim under section 330 of 
the National Defense Authorization Act for Fiscal Year 1993, as amended 
(hereinafter ``section 330''), or under section 1502(e) of the Floyd D. 
Spence National Defense Authorization Act for Fiscal Year 2001, 
(hereinafter ``section 1502(e)''). This rule also identifies the 
documentation

[[Page 34472]]

required to demonstrate proof of any claim, loss, or damage for 
indemnification or defense or for providing notice to DoD of a third-
party claim. This rule also provides the mailing address for such 
requests for indemnification or defense or notice to DoD of a third-
party claim to be filed with DoD, Office of General Counsel, the Deputy 
General Counsel for Environment, Energy, and Installations (DGC(EE&I)). 
This will allow for timely review and greater efficiency in screening 
requests for indemnification or defense by providing clarity to 
requesters.

DATES: This final rule is effective on August 20, 2018.

FOR FURTHER INFORMATION CONTACT: Mr. Philip Sheuerman, 703-692-2287.

SUPPLEMENTARY INFORMATION:

Comments and Responses

    On December 7, 2016 (81 FR 88167-88173), the Department of Defense 
published a proposed rule titled ``Indemnification or Defense, or 
Providing Notice to the Department of Defense, Relating to a Third-
Party Environmental Claim.'' The proposed rule had a 60-day public 
comment period, which ended on February 6, 2017. One commenter 
submitted comments which are addressed in 11 responses below.
    Comment #1: One comment argues that the rule does not properly 
distinguish between the statute of limitations applicable to a request 
for indemnification and any limitations on when a request for defense 
may be made. The comment also suggests that more detail should be 
included as to what constitutes accrual of the action.
    Response #1: The rule simply provides that the request for defense 
must be received by the DGC(EE&I) in sufficient time to allow the DoD 
to provide the requested defense (Sec.  175.6(b)). While the rule does 
identify the statutory limitation on making a request for 
indemnification, it does not identify a time limit for when a request 
for defense must be made. Since seeking defense is separate from making 
a request for indemnification (or providing notice of a third-party 
claim) and is entirely at the discretion of the requester, there is no 
direct connection between a request for indemnification and a request 
for defense. Section 330 describes accrual of action such that the rule 
does not address the matter further. As with many of the comments 
submitted, it is critical to distinguish among a request for 
indemnification, a request for defense, and submittal of notice of a 
third-party claim; these are three separate and distinct actions. (For 
purposes of these responses, it is understood that the DoD will act 
through the Department of Justice when appearing before the courts.) No 
change is made to the rule.
    Comment #2: One comment asserts that the requirements relating to 
notice of a third-party claim are unwarranted changes to the statutory 
provisions of section 330 and that certain unwarranted consequences 
will occur if a recipient of a third-party claim does not provide the 
required 30-day notice (see response to comment #4 for change to 15 
days) of receipt of the third-party claim. Among these asserted 
consequences is a denial of indemnification or defense.
    Response #2: The rule provides a process to give effect to the 
provisions of section 330; in doing so, it does not expand or diminish 
the rights of the parties involved. The rule does not assign any 
consequences to not requesting defense; as noted in the answer to 
question #1, a request for defense is optional and requesting it is at 
the discretion of the recipient of a third-party claim. The only 
consequences occur when a recipient of a third-party claim fails to 
provide notice to the DGC(EE&I) of receipt of the claim in time for the 
United States to choose to intervene. Section 330(c) makes it clear 
that the consequence of not allowing the DoD to defend against a third-
party claim is that a subsequent request for indemnification will be 
denied. This rule provides reasonable notice and process to avoid such 
an eventuality due to a potential requester for indemnification being 
ignorant of or ignoring the statutory rights of the DoD. The comment 
fails to recognize that section 330 authorizes the DoD, at the option 
of the DoD, to intervene and defend against a third-party claim. To 
give substance to this authority, the recipient of a third-party claim 
must provide reasonable notice to the DoD in order to allow DoD to act. 
Otherwise, the ability of the DoD to intervene and defend would be 
ineffectual. Failure to provide the notice does not automatically void 
any subsequent request for indemnification; it only affects a 
subsequent request for indemnification if it compromises the ability of 
the DoD to defend against the third-party claim. Such a determination 
is made within the discretion of the DGC(EE&I), based on the facts of 
the individual matter. To the extent that an assertion can be made that 
the rule modifies section 330, it would only be to the effect that the 
rule is more generous than section 330 because section 330 does not 
address when a failure to allow DoD to defend against a third-party 
claim does no harm to DoD. Section 330 simply provides that ``the 
person may not be afforded indemnification'' without further 
elucidation. No change is made to the rule.
    Comment #3: One comment asserts that the rule is a unilateral 
amendment of existing real property transfer documents that provide for 
notice under section 330, and, as such, obscures the rights of the 
property recipient.
    Response #3: This rule is entered into under the delegated 
authority of the Secretary of Defense relating to the implementation of 
section 330. It is separate and distinct from, and in addition to, any 
real property transfer document provisions that were not entered into 
under that authority. There is no evidence that a request for 
indemnification or defense cannot meet both sources of requirements. 
Because DoD is aware of this concern, it notes in the preamble to this 
rule that for those situations where notice is to be given in 
accordance with, e.g., deeds, to other locations such as a local base 
closure program office, the DoD will continue to accept those notices 
for purposes of meeting the statute of limitations for a period of 180 
days after this rule becomes final. Subsequent to that date, compliance 
with this rule will constitute the only reliable means to ensure 
compliance with the requirements of section 330. No change is made to 
the rule.
    Comment #4: One comment suggests that, while there are firm time 
limits imposed on the requester for indemnification or defense, there 
are no corresponding time limits imposed on the DoD.
    Response #4: The only major time limit imposed on the requester 
relates to a notice of third-party claim. (The statute of limitations 
is statutory and is simply restated.) It is true as the comment notes 
that, in some situations, the 30-day limit on notices of a third-party 
claim may be too long. The DoD believes it best to set a firm limit 
rather than one that is variable for each situation and, therefore, 
unpredictable for the requester. The DoD does recognize, however, the 
legitimacy of the concern over the length of the period and has reduced 
it to 15 days. The DoD does not set a time limit on itself to respond 
to the request because of the complexities involved in gathering 
information from the DoD Component responsible for the former facility, 
the need to thoroughly and accurately assess the legal and factual 
issues, and the need for coordination with potentially several 
divisions

[[Page 34473]]

within the Department of Justice and U.S. Attorney's Offices. The rule 
is changed as noted above.
    Comment #5: One comment notes that the requirement that each 
individual file a separate request for indemnification or defense could 
be onerous, particularly in the situation of a class action lawsuit.
    Response #5: The rule requires a request for indemnification or 
notice of third-party claim from each individual requester. The 
requirement does not apply to third-party claimants. There can be 
numerous third-party claimants against the requester. But each 
requester must represent itself. The DoD cannot be expected to discern 
the individual legal interests of multiple parties to a request for 
indemnification or defense. No change is made to the rule.
    Comment #6: One comment suggests that the requirement to provide 
notice of a third-party claim should allow more informal notice so as 
to expedite delivery of notice and promote the likelihood of the DoD 
being able to exercise its right to defend against such a claim.
    Response #6: The DoD recognizes the benefits of earlier 
notification (and the possibility of some required records not being 
available on short notice) and has added a paragraph to Sec.  175.5(g) 
that allows a requester to provide telephone notification, subject to 
subsequent written confirmation by the DGC(EE&I). Telephone numbers 
have been included in Sec. Sec.  175.5(a) and 175.6(a). The inclusion 
of telephone numbers may also assist in delivery of packages by 
commercial delivery services. The rule is changed as noted above.
    Comment #7: One comment suggests that Sec.  175.5(d) indicates 
that, for example, a lender who does not own or control the site could 
seek indemnification or defense even though not eligible under section 
330.
    Response #7: While it is difficult to see how a lender who does not 
own or control the site would have an interest in seeking 
indemnification, let alone defense, section 330 does not appear to make 
such a distinction. The rule includes ``lender'' because ``lender'' is 
one of those entities eligible under section 330. No change is made to 
the rule.
    Comment #8: One comment suggests that the definition of 
``requester'' in Sec.  175.3 does not fully consider the situation of a 
subrogee (the draft rule incorrectly uses ``subrogee'' when it should 
use ``subrogor'' to refer to the entity from which the subrogee is 
taking its rights and has been corrected accordingly). This is 
particularly the case with the requirements to submit a notice of a 
third-party claim.
    Response #8: Since a request for indemnification can be made within 
two years of accrual of the action, it is entirely feasible for, e.g., 
an insurance company to make a request for indemnification as subrogee 
of its insured. However, it is established law that a subrogee can only 
exercise the rights the subrogor itself had. Consequently, if a 
subrogor did not comply with the requirements of this rule and, in 
doing so, compromised the ability of DoD to defend against the claim, 
the subrogor would have no right to indemnification and its subrogee, 
which can only take its rights from the subrogor, would likewise have 
no right to indemnification. No change is made to the rule except 
correcting the reference from ``subrogee'' to ``subrogor''.
    Comment #9: One comment suggests that the definition of ``third-
party claim'' should discuss whether a citizen's suit under the 
environmental laws would qualify as a third-party claim.
    Response #9: This question is a matter that has not been addressed 
by the courts and the DoD is not inclined to attempt to resolve it in 
this rule. No change is made to the rule.
    Comment #10: One comment inquires as to whether the requirement of 
Sec.  175.5(d)(4) includes all insurance policies such as for workers 
compensation, automobile, errors and omissions, and directors and 
officers.
    Response #10: The experience of DoD is that it cannot rely on a 
requester to choose which policies or parts of policies should be 
submitted. Doing so does not ensure that DoD will receive all relevant 
documentation. If this requirement poses a significant burden on a 
requester, the requester should discuss the matter with the DGC(EE&I), 
knowing that any resulting delay will be charged against the requester. 
No change is made to the rule.
    Comment #11: One comment suggests that Sec.  174.15 of title 32, 
Code of Federal Regulations, Revitalizing Base Closure Communities and 
Addressing Impacts of Realignment, be rescinded.
    Response #11: Section 174.15 contains restrictions on when 
reference may be made to section 330 in base closure real property 
disposal documents. This restriction has served the disposal process 
well by eliminating disputes over, e.g., deed language that frequently 
was inconsistent with the actual terms of section 330. The comment 
does, however, indicate that it would be useful to change this proposed 
rule by inserting a cross-reference to Sec.  174.15 noting that nothing 
in this rule alters the provisions of Sec.  174.15. That change is made 
in Sec.  175.2 with the addition of a new paragraph (c).

Legal Authority

    This part is finalized under 10 U.S.C. 113, 5 U.S.C. 301, section 
330 of the National Defense Authorization Act for Fiscal Year 1993, 
Public Law 102-484, October 23, 1992, 106 Stat. 2371, as amended, and 
section 1502(e) of the Floyd D. Spence National Defense Authorization 
Act for Fiscal Year 2001, Public Law 106-398, October 30, 2000, 1014 
Stat. 1654A-350, as amended.

Background

    Sections 330 and 1502(e) provide that, subject to certain 
exceptions set forth in the statutes, the Secretary of Defense shall 
hold harmless, defend, and indemnify in full certain persons and 
entities that acquire ownership or control of, in the case of section 
330, any military installation closed pursuant to a base closure law 
or, in the case of section 1502(e), certain portions of the former 
Naval Ammunition Support Detachment on the island of Vieques, Puerto 
Rico (hereinafter ``Detachment''), from and against any suit, claim, 
demand or action, liability, judgment, cost or other fee arising out of 
any claim for personal injury or property damage (including death, 
illness, or loss of or damage to property or economic loss) that 
results from, or is in any manner predicated upon, the release or 
threatened release of any hazardous substance, pollutant or 
contaminant, or petroleum or petroleum derivative \1\ as a result of 
DoD activities at any military installation (or portion thereof) that 
is closed pursuant to a base closure law or the Detachment. (Coverage 
of pollutants and contaminants was added to section 330 by an amendment 
contained in the National Defense Authorization Act for Fiscal Year 
1994, Public Law 103-160, 1002.) They also provide that DoD has certain 
rights in defending third-party claims.
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    \1\ Section 1502(e) does not apply to petroleum or petroleum 
derivatives.
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    The authority to adjudicate requests for indemnification and 
process requests for defense under sections 330 or 1502(e) has been 
delegated from the Secretary of Defense to the DoD General Counsel and 
re-delegated by the General Counsel to the DGC(EE&I). Requests for 
indemnification or defense or notice to DoD of a third-party claim must 
be sent to the DGC(EE&I) to be considered.
    The DoD recognizes that some real property transfer documents, such 
as deeds and agreements, entered into in past years provide that 
notification

[[Page 34474]]

under sections 330 or 1502(e) be made to, e.g., the local BRAC program 
office. Prior to the publication of this final rule, DoD has honored 
such notifications made in conformance with those transfer documents. 
Effective 180 days after promulgation of this rule, while a requester 
may continue to provide notification in accordance with such transfer 
documents, a requester must also comply with the notice requirements of 
this rule in order to comply with the requirements of sections 330 or 
1502(e), particularly with regard to when the statutes of limitation in 
sections 330(b)(1) and 1502(e)(2)(A) begin to run. Nothing in this rule 
should be construed as requiring amendment of any such transfer 
documents.
    The United States Court of Appeals for the Federal Circuit has 
interpreted the definition of a ``claim for personal injury or property 
damages'' under section 330 to include, under certain circumstances, 
notice from a governmental enforcement agency to conduct a cleanup. 
Indian Harbor Insurance Co. v. United States, 704 F.3d 949 (Fed. Cir. 
2013). Because such notices may constitute a claim under section 330, a 
requester should carefully evaluate whether failing to provide notice 
to the Secretary would prevent the Secretary from settling or defending 
against a claim.
    The timely and proper filing of a request for indemnification or 
defense enables the DGC(EE&I) to perform its adjudication function for 
requests, maintain oversight of the implementation of sections 330 and 
1502(e), and secure the rights of requesters under sections 330 and 
1502(e). Proper notice to DoD of a claim from a third-party is 
essential to allow DoD to exercise its right to defend against such a 
claim pursuant to sections 330(c) or 1502(e).
    Under sections 330(c)(2) and 1502(e)(3)(B), the requester must 
allow DoD to defend the claim in order to be afforded indemnification 
for that claim. This regulation makes clear that failure to notify DoD 
immediately of receipt of any claim could prevent DoD from settling or 
defending that claim, and on that basis, DoD may deny indemnification. 
Failure to provide necessary documents and access will also prevent DoD 
from exercising its right to settle and defend the claim and, on that 
basis, DoD may deny indemnification.
    In the context of a claim from a governmental enforcement agency or 
third party seeking to require a cleanup or response action, failure to 
notify DoD may prevent DoD from exercising its right to defend against 
the claim. If the requester undertakes a cleanup or response action 
itself prior to providing immediate notice to DoD, the requestor's 
actions may interfere with DoD's ability to defend against a claim, 
which might result in denial of indemnification.
    This final rule does not affect claims that are made pursuant to 
other authorities such as under a real property covenant contained in a 
deed in accordance with section 120(h) of the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980 
(CERCLA).
    DoD has received approximately 14 requests for indemnification 
since 2006. This represents an annual average of requests for 
indemnification of slightly more than one per year. DoD cannot fully 
estimate the cost of the current process upon requesters because the 
only times it has paid such costs are when a request for 
indemnification has been litigated and administrative costs paid as 
part of a settlement. That settlement cost, however, includes the cost 
of litigation, which is substantially greater than the cost of seeking 
an administrative settlement.

Administrative Requirements

A. Executive Order 12866, ``Regulatory Planning and Review'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review''

    E.O. 12866 defines ``significant regulatory action'' as one that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or may adversely affect in a material 
way the economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities; (2) create serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
E.O. 12866.
    It has been determined that this rule is not a significant 
regulatory action. This rule has not been reviewed by OMB under the 
requirements of these Executive Orders.

B. Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs''

    This rule is not an E.O. 13771 regulatory action because this rule 
is not significant under E.O. 12866.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601, et seq., 
requires Federal agencies to consider ``small entities'' throughout the 
regulatory process. Section 603 of the Regulatory Flexibility Act 
requires an initial screening analysis performance to determine whether 
small entities will be adversely affected by the regulation. No 
comments were received relating to the requirements of the Regulatory 
Flexibility Act. It has been certified that this final rule will not 
add to the current burden for small entities to report their activities 
based on a request for indemnification or defense under sections 330 or 
1502(e).

D. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995, 44 U.S.C. 3501, authorizes the 
Director of OMB to review certain information collection requests by 
Federal agencies. The recordkeeping and reporting requirements of this 
final rule do not constitute a ``collection of information'' as defined 
in 44 U.S.C. 3502(3), the Paperwork Reduction Act of 1995.

E. Environmental Justice

    Under E.O. 12898 (59 FR 7629 (February 11, 1994)), Federal Actions 
to Address Environmental Justice in Minority Populations and Low-Income 
Populations, Federal agencies are required to identify and address 
disproportionately high and adverse human health and environmental 
effects of Federal programs, policies, and activities on minority and 
low-income populations.
    Sections 330 and 1502(e) are intended to reduce specified risks 
resulting from development of former military land by aiding and 
legally protecting the entities that take title to land on closed 
military installations for development purposes. Because this rule will 
equally affect, on a national basis, requests for indemnification 
associated with the development of land, a disparate impact on minority 
and low-income population areas is not expected.

F. Unfunded Mandates

    Title II of the Unfunded Mandates Report Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local,

[[Page 34475]]

and Indian tribal governments and the private sector.
    The DoD has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and Indian tribal governments, in the aggregate, or the 
private sector in any one year. Thus, this final rule is not subject to 
the requirements of Section 202 of the UMRA.

G. Executive Order 13132, ``Federalism''

    It has been determined that this rule does not have federalism 
implications. This rule does not have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.

List of Subjects in 32 CFR Part 175

    Indemnification, Claim.

0
Accordingly, 32 CFR part 175 is added to read as follows:

PART 175--INDEMNIFICATION OR DEFENSE, OR PROVIDING NOTICE TO THE 
DEPARTMENT OF DEFENSE, RELATING TO A THIRD-PARTY ENVIRONMENTAL 
CLAIM

Sec.
175.1 Purpose.
175.2 Applicability.
175.3 Definitions.
175.4 Responsibilities.
175.5 Notice to DoD relating to a third-party claim.
175.6 Filing a request for indemnification or defense.


    Authority: 10 U.S.C. 113, 5 U.S.C. 301, section 330 of the 
National Defense Authorization Act for Fiscal Year 1993, Public Law 
102-484, October 23, 1992, 106 Stat. 2371, as amended, and section 
1502(e) of the Floyd D. Spence National Defense Authorization Act 
for Fiscal Year 2001, Pub. L. 106-398, October 30, 2000, 1014 Stat. 
1654A-350, as amended.


Sec.  175.1  Purpose.

    This part describes the process for filing a request for 
indemnification or defense, or providing proper notice to DoD, of a 
third-party claim pursuant to section 330 of the National Defense 
Authorization Act for Fiscal Year 1993, Public Law 102-484, October 23, 
1992, 106 Stat. 2371, as amended (hereafter ``section 330''), or 
section 1502(e) of the Floyd D. Spence National Defense Authorization 
Act for Fiscal Year 2001, Public Law 106-398, October 30, 2000, 1014 
Stat. 1654A-350, as amended (hereafter ``section 1502(e)''). This 
process identifies the minimum information that a request for 
indemnification or defense or notice to DoD of a third-party claim for 
indemnification must include, where that information must be sent, how 
to make such a request or provide such a notice, the time limits that 
apply to such a request or notice, and other requirements.


Sec.  175.2  Applicability.

    (a) This part applies to--
    (1) The Office of the General Counsel of the Department of Defense 
and the Military Departments.
    (2) Any person or entity making a request for indemnification or 
defense, or providing notice to DoD, of a third-party claim pursuant to 
section 330 or section 1502(e).
    (b) In the case of a property that is subject to an earlier 
agreement containing different notification requirements, the 
requirement for notice to the Deputy General Counsel in sections 175.5 
and 175.6 are in addition to those notification requirements.
    (c) Nothing in this part alters the provisions of Sec.  174.15 of 
this title.


Sec.  175.3  Definitions.

    Commercial delivery service. Federal Express or United Parcel 
Service, or other similar service that provides for delivery of 
packages directly from the sender to the recipient for a fee, but 
excluding the United States Postal Service (USPS).
    Deputy General Counsel. The Deputy General Counsel (Environment, 
Energy, and Installations), Department of Defense.
    Received. Actual physical receipt by the intended recipient.
    Request. Any request for indemnification or defense made to the 
Department of Defense (DoD) by a requester pursuant to section 330 or 
section 1502(e).
    Requester. A person or entity making a request pursuant to section 
330 or section 1502(e). When the requester is acting by way of 
subrogation, the requester is subject to the same requirements and 
limitations as though it were the subrogor.
    Section 330. Section 330 of the National Defense Authorization Act 
for Fiscal Year 1993, Public Law 102-484, October 23, 1992, 106 Stat. 
2371, as amended.
    Section 1502(e). Section 1502(e) of the Floyd D. Spence National 
Defense Authorization Act for Fiscal Year 2001, Public Law 106-398, 
October 30, 2000, 114 Stat. 1654A-350. (This provision applies only to 
certain portions of the former Naval Ammunition Support Detachment on 
the island of Vieques, Puerto Rico.)
    Third-party claim. A claim from a person or entity (other than the 
requester) to a requester resulting from a suit, claim, demand or 
action, liability, judgment, cost or other fee, demanding, seeking, or 
otherwise requiring that the requester pay an amount, take an action, 
or incur a liability for alleged personal injury or property damage and 
such payment, action, or liability is eligible for indemnification or 
defense pursuant to section 330 or section 1502(e). A third-party claim 
may consist of a notice, letter, order, compliance advisory, compliance 
agreement, or similar direction from a governmental regulatory 
authority exercising its authority to regulate the release or 
threatened release of any hazardous substance, pollutant or 
contaminant, or petroleum or petroleum derivative if the notice, 
letter, order, compliance advisory, compliance agreement, or similar 
notification imposes, directs, or demands requirements for 
environmental actions or asserts damages related thereto that are 
eligible for indemnification or defense pursuant to section 330 or 
section 1502(e).


Sec.  175.4  Responsibilities.

    (a) The General Counsel of the Department of Defense has been 
delegated the authorities and responsibilities of the Secretary of 
Defense under section 330 and section 1502(e), with certain limitations 
as to re-delegation.
    (b) The General Counsel has re-delegated the authority and 
responsibility to adjudicate requests for indemnification or defense 
and to process notices to DoD of a third-party claim under section 330 
and section 1502(e) to the Deputy General Counsel or, when the position 
of Deputy General Counsel is vacant, the acting Deputy General Counsel. 
The authority to acknowledge receipt of a request has been delegated to 
an Associate General Counsel under the Deputy General Counsel.


Sec.  175.5  Notice to DoD relating to a third-party claim.

    (a) Where to file a notice to DoD of a third-party claim. (1) 
Notice to DoD of receipt of a third-party claim, or intent to enter 
into, agree to, settle, or solicit such a claim, must be received by 
the Deputy General Counsel at the following address: Deputy General 
Counsel, Environment, Energy, and Installations, 1600 Defense Pentagon, 
Room 3B747, Washington, DC 20301-1600, (703-693-4895) or (703-692-
2287).
    (2) Delivering or otherwise filing a notice of a third-party claim 
with any other office or location will not

[[Page 34476]]

constitute proper notice for purposes of this part. Requesters should 
be aware that all delivery services, and particularly that of the USPS, 
to the Pentagon can be significantly delayed for security purposes and 
they should plan accordingly in order to meet any required filing 
deadlines under this part; use of a commercial delivery service may 
reduce the delay.
    (b) Individual notices. A notice to DoD of a third-party claim must 
be filed separately for each person or entity that is filing the 
notice. Notices may not be filed jointly for a group, a class, or for 
multiple persons or entities.
    (c) Means of filing a notice of a third-party claim. A notice of a 
third-party claim must be submitted in writing by mail through the USPS 
or by a commercial delivery service. While the Deputy General Counsel 
will affirmatively acknowledge receipt of a notice of a third-party 
claim, it is recommended that a requester, whether using the USPS or a 
commercial delivery service, mail its notice by registered or certified 
mail, return receipt requested, or equivalent proof of delivery.
    (d) Information to be included in a notice to DoD of a third-party 
claim. A notice to DoD of a third-party claim must include, at a 
minimum, the following information:
    (1) A complete copy of the third-party claim, or, if not presented 
in writing, a complete summary of the claim, with the names of 
officers, employees, or agents with knowledge of any information that 
may be relevant to the claim or any potential defenses. The third-party 
claim may consist of a summons and complaint or, in the case of a 
third-party claim from a governmental regulatory authority, a notice, 
letter, order, compliance advisory, compliance agreement, or similar 
notification.
    (2) A complete copy of all pertinent records, including any deed, 
sales agreement, bill of sale, lease, license, easement, right-of-way, 
or transfer document for the facility for which the third-party claim 
is made.
    (3) If the requester is not the first transferee from DoD, a 
complete copy of all intervening deeds, sales agreements, bills of 
sale, leases, licenses, easements, rights-of-way, or other transfer 
documents between the original transfer from DoD and the transfer to 
the current owner. If the requester is a lender who has made a loan to 
a person or entity who owns, controls, or leases the facility for which 
the request for indemnification is made that is secured by said 
facility, complete copies of all promissory notes, mortgages, deeds of 
trust, assignments, or other documents evidencing such a loan by the 
requester.
    (4) A complete copy of any insurance policies related to such 
facility.
    (5) If the notice to DoD of a third-party claim is being made by a 
representative, agent, or attorney in fact or at law, proof of 
authority to make the notice on behalf of the requester.
    (6) Evidence or proof of any claim, loss, or damage alleged to be 
suffered by the third-party claimant which the requester asserts is 
covered by section 330 or by section 1502(e).
    (7) In the case where a requester intends to enter into, agree to, 
settle, or solicit a third-party claim, a description or copy of the 
proposed claim, settlement, or solicitation, as the case may be.
    (8) To the extent that any environmental response action has been 
taken, the documentation supporting such response action and its costs 
included in the request for indemnification.
    (9) To the extent that any environmental response action has been 
taken, a statement as to whether the remedial action is consistent with 
the National Oil and Hazardous Substances Pollution Contingency Plan 
(part 300 of title 42, Code of Federal Regulations) or other applicable 
regulatory requirements.
    (10) A complete copy of any claims made by the requester to any 
other entity related to the conditions on the property which are the 
subject of the claim, and any responses or defenses thereto or made to 
any third-party claims, including correspondence, litigation filings, 
consultant reports, and other information supporting a claim or 
defense.
    (e) Entry, inspection, and samples. The requester must provide DoD 
a right of entry at reasonable times to any facility, establishment, 
place, or property under the requester's control which is the subject 
of or associated with the requester's notice of third-party claim and 
must allow DoD to inspect or obtain samples from that facility, 
establishment, place, or property.
    (f) Additional information. The Deputy General Counsel will advise 
a requester in writing of any additional information that must be 
provided to defend against a claim. Failure to provide the additional 
information in a timely manner may result in denial of a request for 
indemnification or defense for lack of information to adjudicate the 
claim.
    (g) When to file a notice to DoD of a third-party claim. (1) A 
requester must, within 15 days of receiving a third-party claim, file 
with DoD a notice of such claim in accordance with this part. Failure 
to timely file such a notice, if it in any way compromises the ability 
of DoD to defend against such a claim pursuant to section 330(c) or 
section 1502(e)(3), will result in denial of any subsequent request for 
indemnification or defense resulting from such a claim. Requesters who 
take action in compliance with any such third-party claim, or any part 
of such claim, without first providing DoD with a notice of such claim 
in accordance with this section do so at their own risk.
    (2) A requester must, at least 30 days prior to the earlier of 
entering into, agreeing to, settling, or soliciting a third-party 
claim, file a notice to DoD of such intent in accordance with this 
part. Failure to file such a notice will compromise the ability of DoD 
to defend against such a claim pursuant to section 330(c) or section 
1502(e)(3) and will result in denial of any subsequent request for 
indemnification or defense resulting from such a claim.
    (3) A requester may, if it believes more immediate notice to DoD is 
desirable or less than all the information required by paragraph (d) of 
this section is immediately available, contact the Deputy General 
Counsel using the phone numbers in paragraph (a)(1) of this section. 
Any such contact does not constitute compliance with the requirements 
of paragraph (g)(1) or (2) of this section unless and until the Deputy 
General Counsel subsequently provides written confirmation that the 
notice constitutes such compliance. Such written confirmation may be 
provided by electronic means.
    (h) No implication from DoD action. Any actions taken by DoD 
related to defending a claim do not constitute a decision by DoD that 
the requester is entitled to indemnification or defense.
    (i) Notice also constituting a request for indemnification or 
defense. Notice of receipt of a third-party claim may also constitute a 
request for indemnification or defense if that notice complies with all 
applicable requirements for a request for indemnification or defense.


Sec.  175.6  Filing a request for indemnification or defense.

    (a) Where to file a request for indemnification or defense. (1) In 
order to notify DoD in accordance with section 330(b)(1) or section 
1502(e)(2)(A), a request for indemnification or defense pursuant to 
section 330 or section 1502(e) must be received by the Deputy General 
Counsel at the following address: Deputy General Counsel, Environment, 
Energy, and Installations, 1600 Defense Pentagon, Room 3B747, 
Washington, DC

[[Page 34477]]

20301-1600, (703-693-4895) or (703-692-2287).
    (2) Delivering or otherwise filing a request for indemnification or 
defense with any other office or location will not constitute proper 
notice of a request for purposes of section 330(b)(1) or section 
1502(e)(2)(A). Requesters should be aware that all delivery services, 
and particularly that of the USPS, to the Pentagon can be significantly 
delayed for security purposes and they should plan accordingly in order 
to meet any required filing deadlines under this part; use of a 
commercial delivery service may reduce the delay.
    (b) When to file a request for indemnification or defense. A 
request for indemnification must be received by the Deputy General 
Counsel within two years after the claim giving rise to the request 
accrues. A request for defense must be received by the Deputy General 
Counsel in sufficient time to allow the United States to provide the 
requested defense.
    (c) Means of filing a request for indemnification or defense. A 
request for indemnification or defense must be submitted in writing by 
mail through the USPS or by a commercial delivery service. While the 
Deputy General Counsel will affirmatively acknowledge receipt of a 
request for indemnification or defense, it is recommended that a 
requester, whether using the USPS or a commercial delivery service, 
mail its request by registered or certified mail, return receipt 
requested, or equivalent proof of delivery.
    (d) Individual requests. A request for indemnification or defense 
must be filed separately for each person or entity that is making the 
request. Requests may not be filed jointly for a group, a class, or for 
multiple persons or entities.
    (e) Information to be included in a request for indemnification or 
defense. A request for indemnification or defense must include, at a 
minimum, the following information:
    (1) A complete copy of the third-party claim, or, if not presented 
in writing, a complete summary of the claim, with the names of 
officers, employees, or agents with knowledge of any information that 
may be relevant to the claim or any potential defenses.
    (2) A complete copy of all pertinent records, including any deed, 
sales agreement, bill of sale, lease, license, easement, right-of-way, 
or transfer document for the facility for which the request for 
indemnification or defense is made.
    (3) If the requester is not the first transferee from DoD, a 
complete copy of all intervening deeds, sales agreements, bills of 
sale, leases, licenses, easements, rights-of-way, or other transfer 
documents between the original transfer from DoD and the transfer to 
the current owner. If the requester is a lender who has made a loan to 
a person or entity who owns, controls, or leases the facility for which 
the request for indemnification is made that is secured by said 
facility, complete copies of all promissory notes, mortgages, deeds of 
trust, assignments, or other documents evidencing such a loan by the 
requester.
    (4) A complete copy of any insurance policies related to such 
facility.
    (5) If the request for indemnification or defense is being made by 
a representative, agent, or attorney in fact or at law, proof of 
authority to make the request on behalf of the requester.
    (6) Evidence or proof of any claim, loss, or damage covered by 
section 330 or by section 1502(e).
    (7) In the case of a request for defense, a copy of the documents, 
such as a summons and complaint, or enforcement order, representing the 
matter against which the United States is being asked to defend.
    (8) To the extent that any environmental response action has been 
taken, the documentation supporting such response action and its costs 
included in the request for indemnification.
    (9) To the extent that any environmental response action has been 
taken, a statement as to whether the remedial action is consistent with 
the National Oil and Hazardous Substances Pollution Contingency Plan 
(part 300 of title 42, Code of Federal Regulations) or other applicable 
regulatory requirements.
    (10) A complete copy of any claims made by the requester to any 
other entity related to the conditions on the property which are the 
subject of the claim, and any responses or defenses thereto or made to 
any third-party claims, including correspondence, litigation filings, 
consultant reports, and other information supporting a claim or 
defense.
    (f) Entry, inspection, and samples. The requester must provide DoD 
a right of entry at reasonable times to any facility, establishment, 
place, or property under the requester's control which is the subject 
of or associated with the requester's request for indemnification or 
defense and must allow DoD to inspect or obtain samples from that 
facility, establishment, place, or property.
    (g) Additional information. The Deputy General Counsel will advise 
a requester in writing of any additional information that must be 
provided to adjudicate the request for indemnification or defense. 
Failure to provide the additional information in a timely manner may 
result in denial of the request for indemnification or defense.
    (h) Adjudication. The Deputy General Counsel will adjudicate a 
request for indemnification or defense and provide the requester with 
DoD's determination of the validity of the request. Such determination 
will be in writing and sent to the requester by certified or registered 
mail.
    (i) Reconsideration. Any such determination will provide that the 
requester may ask for reconsideration of the determination. Such 
reconsideration shall be limited to an assertion by the requester of 
substantial new evidence or errors in calculation. The requester may 
seek such reconsideration by filing a request to that effect. A request 
for reconsideration must be received by the Deputy General Counsel 
within 30 days after receipt of the determination by the requester. 
Such a request must be sent to the same address as provided for in 
paragraph (a)(1) of this section and provide the substantial new 
evidence or identify the errors in calculation. Such reconsideration 
will not extend to determinations concerning the law, except as it may 
have been applied to the facts. A request for reconsideration will be 
acted on within 30 days from the time it is received. If a request for 
reconsideration is made, the six month period referred to in section 
330(b)(1) and section 1502(e)(2)(A) will commence from the date the 
requester receives DoD's denial of the request for reconsideration.
    (j) Finality of adjudication. An adjudication of a request for 
indemnification constitutes final administrative disposition of such a 
request, except in the case of a request for reconsideration under 
paragraph (i) of this section, in which case a denial of the request 
for reconsideration constitutes final administrative disposition of the 
request.

    Dated: July 16, 2018.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2018-15487 Filed 7-19-18; 8:45 am]
BILLING CODE 5001-06-P