Expert Commentary

Superfund Decision May Benefit Design-Builders on Environmental Remediation Projects

Design professionals and contractors have long been concerned about their own potential liability under CERCLA. This article discusses the recent Florida court decision and its affect on environmental liability under Superfund.

Design and Professional Liability
April 2001

Design professionals and contractors have long been concerned about their own potential liability under the environmental liability of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or "Superfund"). This article discusses the recent decision of Bashland, Bouck & Lee v City of North Miami, 96 F Supp 2d 1375 (SD Fla 2000), and its affect on such liability under Superfund.

The Problem

Numerous courts have imposed strict liability on design professionals and contractors for environmental impairment resulting from their services. In one case, a contractor was held to be subject to strict liability as a "transporter" under Superfund for moving contaminated backfill around a construction site. This was despite the fact that the contractor did not know the material was contaminated and did not move it off-site.

In another case, an engineer was held to be subject to strict liability as an "arranger" for disposal of hazardous waste on the basis of having provided a site owner with the names of several licensed disposal facilities as options for disposing of wastes removed from the site during cleanup activities.

Although several trade associations frequently lobbied Congress to amend the statute to protect contractors and design professionals from being sued for strict liability under Superfund as a "potentially responsible party" ("PRP") on projects for which they performed services, no meaningful relief has ever been enacted. In managing their environmental remediation contracts and projects in a manner to reduce the risk of such liability, contractors have sought to place ultimate responsibility for decisions concerning disposal site selection, transportation, and operations into the hands of others, such as the site owner or the design professional. This risk management device may be less effective or even impossible, however, when the remediation is performed as a design-build project.

In the context of design-build projects, there has been concern that the team of the design professional and contractor would have a greater potential liability under CERCLA because together they are responsible for making many of the decisions affecting the design, testing, and movement of soil and possibly groundwater that could have environmental impact. The design-builder is more likely to be accused by a site owner or government agency of having PRP liability because it is the single point of accountability for decisions affecting the environment.

The Case

In Bashland, Bouck & Lee v City of North Miami, the City hired an engineering firm ("BB&L") to assist it in implementing an environmental cleanup plan for a landfill that was on the U.S. Environmental Protection Agency (EPA) National Priorities List because of uncontrolled hazardous releases that included ammonia leaching into the groundwater. The firm conducted hydrogeologic studies of the aquifer and used those studies to design a leachate collection system. It also did pump tests, computer modeling, surface and groundwater sampling, and design services related to relocating an earthen dike.

The City terminated the engineering contract and refused to pay the balance of fee that was due. BB&L sued the City to recover its unpaid fee. In its defense, the City argued that the engineer was a "potentially responsible party" (PRP) and, therefore, barred from recovering the costs it claimed. The crux of the City's argument was that the engineer allegedly contributed to increased cleanup costs and had liability under CERCLA as either an "operator" of a hazardous waste facility or an "arranger" for the disposal of hazardous wastes at a facility.

In reviewing the matter, the court concluded that negligent performance of services by the engineer would not subject the engineer to PRP liability. As explained by the court, a PRP is an owner or operator of a CERCLA facility. The basis for the City's assertion that the engineer was an "operator" or "arranger" included the following theories:

  • The engineer was an "operator" or "arranger" because it had "operational control" of the site;
  • The engineer failed to develop an adequate remedial design which permitted the ammonia to continue migrating through the groundwater; and
  • The engineer's excavation of soil in order to obtain test samples of the waste that was already in the ground contaminated the "clean cover" and, therefore, constituted "arranging" disposal of hazardous waste.

All three theories were rejected by the court, which concluded that "engaging in cleanup activity at a facility does not qualify as the type of 'operation' CERCLA contemplates." Before a party can be found to be an "arranger," the court said that the "party must take an affirmative step to introduce hazardous substances to an area—mere inaction or inept action which fails to remedy but does not worsen existing contamination is not sufficient."

The City did not allege that the engineer brought any contaminant onto the site and released it. "Here, the City alleges BB&L's negligence enabled ammonia to continue to migrate through the landfill. This is insufficient to establish arranger liability because no affirmative step was taken."

The court also rejected the City's argument that BB&L's action in refilling excavated pits with the same soil that was removed for testing purposes constituted "disposal." This gets to the question of whether the mere act of inadvertently moving contaminated material around a site is enough to render a firm liable under the strict liability aspects of CERCLA. According to the court, it does not.

A second flaw with the City's argument, according to the court, was that "a response action contractor cannot be liable for response costs unless it is negligent and such negligence causes the release of a hazardous substance." In this case, although there had been negligence in the remedial design services, the court found that there was no evidence that the soil investigation had been performed negligently. The court concluded that the engineer's excavation activities did not cause it to become a CERCLA arranger, and that it was, therefore, not a PRP within the meaning of the law.

Risk Management Conclusion

By subjecting designers and contractors to Superfund strict liability in cases such as that reported here, other courts have caused a chilling effect on the ability and willingness of designers and contractors to perform work related to the cleanup of contaminated sites. It is to be hoped that the logic of this decision will be followed by other courts around the country. The decision of this court sets forth some very practical principles on which to defend against such liability.

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