CONSTRUCTION CONTRACTORS AND CERCLA LIABILITY.

The Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. (CERCLA), attempts to establish a comprehensive scheme of liability for the clean-up of hazardous waste. Often such clean-up costs run into millions of dollars. While one might think construction contractors are immune to CERCLA liability, recent cases indicate that such is not the case.

Parties liable for CERCLA clean-up costs are grouped into four categories: (1) the owner and operator of a vessel or a facility, (2) any person who, at the time of disposal of any hazardous substances, owned or operated any facility at which such hazardous substances were disposed of, (3) any person who by contract, agreement or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such persons, by any other party or entity at any facility or incineration vessel owned and operated by another party or entity and containing such hazardous substances, and (4) any person who accepts or has accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the occurrence of response costs, of a hazardous substance.

Based on these categories of potentially liable parties, it may be questioned how a construction contractor could be liable under CERCLA. One example is shown in the recent case of Kaiser Aluminum and Chemical Corporation v. Catellus Development Corp., 976 F.2d 1338 (9th Cir. 1992). In that case, the owner of a parcel of property sued the prior owner to recover the cost of removing contaminated soil from the property. The prior owner then sued an excavation contractor hired by the current owner to grade the property. The prior owner claimed the excavator had magnified the contamination by removing contaminated soil from one area of the property and spreading it over an uncontaminated part of the property. The court concluded that the excavator did not fall within the 1st and 3rd categories of potentially liable parties, but did fall within the 2nd and 4th categories. With respect to the category (2) classification, the focus was whether the excavator was an “operator” as defined in CERCLA. The court held that a contractor can be an “operator” for purposes of CERCLA liability, but must have authority to control the day to day operation of the “facility” (site of the work) at the time the hazardous materials were released to qualify. With regard to the facts of the case, the court concluded that the activity producing the contamination was the excavation and grading work performed by the contractor during the construction process. Furthermore, the court concluded that the excavator had sufficient control over the property to be an “operator” under CERCLA, and by excavating and spreading the tainted soil over other portions of the site the excavator had “disposed” of the hazardous materials in a way prohibited by the Act. Accordingly, in reaching this decision the court broadened the definition of “disposal” to include both the initial introduction of hazardous material onto the property and any later disbursement of those materials.

A similar example is shown in Danella Southwest, Inc. v. Southwestern Bell Telephone Co., 775 F.Supp. 1227 (E. D. Mo. 1991). In that case, an excavator was directed to perform certain trenching and cable laying work for Southwestern Bell Telephone Company. The area in which the excavator was directed to trench and lay this cable had been previously confirmed as a dioxin contaminated site, though neither Southwestern Bell nor the excavator knew this. During the work, the excavator trenched the site in accordance with the plans and specifications, and removed the spoil to an off-site location. The court classified both Southwestern Bell and the excavator as potentially liable parties under CERCLA.

Another interesting extension of potential liability is shown in Environmental Transport Systems, Inc. v. ENSCO, Inc., 763 F.Supp. 384 (C.D. Ill. 1991). In that case, a contract carrier was hired to transport several out-of-service electrical transformers to a disposal site. The transformers contained PCB dielectric fluid. While hauling these transformers on a flat bed trailer, the driver lost control of his rig, flipped the truck and trailer on its side, and spilled the transformers onto the ground. One transformer was punctured and 100 gallons of PCB’s were spilled onto the surrounding soil. In analyzing this factual scenario, the court concluded that the transformers which held the PCBs, the truck and trailer which was hauling the transformers, and the area of land which suffered the spill, were all within the CERCLA definition of “facility”. As a result, the carrier was found 100% responsible for the clean-up costs.

Based upon the foregoing examples, it is clear that construction contractors are not immune to CERCLA liability. Though some contractors will be more naturally susceptible to potential liability than others, all contractors should be mindful of the potential for liability and take measures to avoid the risk attendant to dealing with hazardous materials. Even a lack of knowledge concerning the existence of hazardous substances does not exempt a potentially liable party from CERCLA liability. When it comes to potential CERCLA liability, contractors are well-advised to make sure they are not exposing themselves to potential liability.

Steven K. Metcalf

This Newsletter addresses recent items of interest in various areas pertaining to the construction industry. While the Newsletter may alert you to potential problems or changes in the law, it does not attempt to offer solutions, opinions, or advice concerning specific problems. Such legal advice or opinion can only be given by an attorney after careful consideration of the facts unique to a given situation. Inquiries concerning this Newsletter or its subject matter should be directed to its contributors, Steven K. Metcalf, Esq. at (918) 430-3703 or William H. Spitler, Esq. at (918) 430-3704.