The Pitfalls of Accepting Contaminated Fill
March 2002
What happens when an earthwork contractor
accepts fill material at the site to establish proper elevations only to discover
later that the "clean fill" is anything but? Jeff Slivka provides ways to control
the exposure.
by Jeff
Slivka
New Day
Underwriting Managers LLC
An earthwork contractor walks on to a job site. A commercial structure will
be built upon completion of the site prep work. The earthwork contractor accepts
fill material at the site to establish proper elevations. The same material
is used throughout the site wherever needed.
Several weeks into the project, it is determined that the supposedly "clean
fill" was not so "clean" after all; it contained heavy metals and volatile organic
compounds (solvents) that rendered the material hazardous. (Keep in mind that
where hazardous waste/material comes in contact with non-hazardous material,
all material is subsequently deemed hazardous and must be remediated, treated,
or disposed of as such.) The project comes to a halt, and litigation ensues.
Two questions usually follow: "Where did this stuff come from?" and "Who
is responsible for placing it?" Unfortunately, those are questions that should
have been asked and answered before the fill was ever accepted. Had the contractor
had the answers to these questions, they may have prevented a huge headache.
Proper Expectations
It is always important to know what the client's expectations are when it
comes to how "clean" the fill must be to avoid litigation and potentially devastating
cleanup costs. In Colonial Oil Industries, Inc. v Underwriters
Subscribing to Policy Nos. TO31504670 and TO31504671, No. 95-9603 (11th
Cir Feb. 27, 1997), the differing views between the two parties to a contract
about what constitutes "clean fill" caused a lot of problems.
In the early 1990s, Colonial contracted to dredge part of a river to make
way for construction of a new pier. Colonial also contracted to deposit the
dredged materials on a nearby island owned by Charles Gay. Colonial and Gay
signed a "Spoilage Disposal Easement" permitting Colonial to deposit "clean
fill" on the island. Colonial obtained all necessary permits and started dredging.
The permit described the materials to be deposited as "firm silty to gray
sandy clay"; however, the easement never stipulated exactly what was to be deposited.
Apparently Mr. Gay had expected "sandbox quality sand" to be dredged and deposited
on his island, but when he inspected the site, he found bricks, wire cable,
and lumber. Mr. Gay sued to have Colonial remove the deposited materials, alleging,
among other things, that Colonial had violated the easement by depositing things
other than "clean fill" and that Colonial was liable for dumping hazardous materials
onto his property.
The point of this case—when the owner decides he does not like what the contractor
has done and/or he discovers something that is not quite as clean as it he thinks
it should be—there is the potential for litigation. Whether hazardous material
has been brought onto the owner's property by the contractor, or the contractor
merely spreads preexisting contamination around the site, there is a likelihood
that the contractor stands to foot a portion, if not all, of the bill for the
cleanup.
For purposes of this article, we will not cover the complex web of Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA or Superfund)
liability associated with the above cases. Rather, we will focus instead on
the way to mitigate or prevent such risk. However, the thing about CERCLA liability
that must be understood (but many times not accepted) is that, as a potentially
responsible party (PRP)—which includes past and present owners of the property,
generators or transporters of the waste or materials—you may be held jointly
and severally liable. This means you could be held responsible for a portion
or the entire necessary cleanup, and this applies retroactively, going back
prior to the promulgation of any environmental statutes.
Controlling the Exposure
There's a simple way to avoid the above situation: never accept contaminated
material on the job site. Easy! If you need more suggestions, you may want to
incorporate some of the tactics below to prevent yourself from getting into
such a mess.
Visual inspections. Conduct visual inspections
of the material before it is accepted and during the unloading process to ensure
the material "looks" acceptable. Simple visual inspections can identify petroleum
hydrocarbons and other contaminants that discolor soils, let alone the more
obvious such as asphalt, lumber, block, concrete, painted materials, and the
like.
Request sample analysis. In the event the material
is not coming from a known clean fill site, make a request for the material
to be sampled and analyzed for organic and inorganic (heavy metals) compounds,
at minimum. In the event the material was analyzed, your decision becomes relatively
easy. Accept it or, depending on the type and levels of contaminants, use it
for another purpose or site.
Sample the material yourself. In reality, if
the owner of the material is not in the practice of analyzing the material,
the likelihood that they will do it for you is slim. Therefore, you may want
to attempt to analyze or inspect yourself. With a photo-ionizing detector (PID)
or organic vapor analyzer (OVA), certain contaminants can be identified. Such
tests will not tell you exactly what you have and will not detect heavy metals,
but can raise some red flags if there is a real problem. For a few hundred dollars,
you can purchase either piece of equipment. Not a bad investment! However, make
sure the personnel utilizing these devices are properly trained to operate them.
Audit the facilities from which the material comes. In the event you routinely accept fill material from one or two locations, conduct
a simple and brief audit of the facility or site. Ask to look at their environmental
management plans, permit status, operations, site security, waste management,
on-site tanks and the like. This will give you a good idea of what you are dealing
with and can be conducted quite painlessly.
Never accept material from unknown origin. This is by far the most important and least expensive tactic. If there is one
thing that should certainly be a part of any company's practice, it is finding
out where the material came from. Knowing the location and the organization
providing the material can tell you much about the stuff without ever setting
eyes on it. This also applies to sites where soil/dirt is already stockpiled.
Identify the source!
Contractual indemnity. You can always attempt
to have the supplier of the material indemnify you for any resulting liability
arising out of contaminated fill. As with every indemnity, there are positives
and negatives. The biggest drawback is that the indemnity is only as strong
as the financial condition of the indemnitor! Therefore, ensure the supplier
has the financial wherewithal to support such a contract before entering into it.
Do Something!
Too many times, costly headaches could have been prevented with simple, inexpensive
tactics executed properly. Don't practice "knock-on-wood risk management." You
know, close your eyes and hope and pray that nothing goes wrong! We all do it,
and sometimes it works. Sometimes!
As I end many of articles such as this one, my simple recommendation is—do
something! There are a few tactics outlined above that can help. If you have
already instituted some or all, great! If not, it is definitely something you
should consider.
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