An engineering firm hired to advise on the operation of a landfill is not liable for cleaning up hazardous substances at the site, according to a federal district court ruling.
The case began with the ill-fated efforts of the city of North Miami, Fla., to develop a municipal recreation complex on city-owned property. In 1972, the city leased raw land to Munisport Inc. under terms that Munisport would construct certain recreational amenities. For its efforts, Munisport would operate the facilities and keep most of the profits.
Shortly after the parties signed the lease, Munisport received permission to develop a landfill on the property. The city and Munisport agreed that a landfill would benefit the project by raising the level of the terrain and helping offset expenses.
Munisport hired Post, Buckley, Shuh & Jernigan (PBS&J) to design the project, obtain the permits and provide engineering and consulting services for the landfill.
From 1974 to 1980, the landfill accepted more than 6 million cubic yards of solid wastes, including household garbage, construction debris, industrial and commercial refuse and some hazardous wastes. It generated about $8 million in revenue for Munisport.
During this time, the facility received intense regulatory scrutiny and vigorous local opposition. After many hearings and lawsuits stemming from permit violations and regulatory noncompliance at the landfill, state and federal authorities revoked all permits for the facility in 1980. As a result, the recreation project collapsed, and Munisport was dissolved a year later.
In 1983, the Environmental Protection Agency (EPA) named the Munisport landfill on its National Priorities List of uncontrolled hazardous release sites. An agency investigation uncovered severe groundwater contamination, surface water, sediment and soils, as well as a threat to nearby aquatic life from leachate.
EPA devised a remedial action plan and urged all potentially liable parties to work voluntarily. Only the city responded, signing a consent decree with EPA under which it assumed responsibility for cleaning up the site and for reimbursing EPA. The city then sued the principals of Munisport and its contractors, including PBS&J, claiming that the other parties were operators or generator-arrangers with respect to the landfill and, thus, should pay their fair share of the cleanup costs.
The city had no trouble proving three of the four elements of a Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) cost recovery action: that hazardous substances were deposited or disposed of at the site; that a release or threatened release of hazardous substances occurred on the site; and that the plaintiff incurred response costs due to such release or threatened release. Indeed, none of the parties disputed any aspect of the first three elements.
However, PBS&J disputed the fourth element: that it fit within one of the categories of "liable parties" under the law. To win its case against the engineering firm, the city had to establish that PBS&J was a generator-arranger of hazardous wastes or an operator. The city conceded that PBS&J was not an owner or transporter.
CERCLA imposes strict liability on those who "operated any facility at which . . . hazardous substances were disposed of . . . " 42 U.S.C. S 9607 (a) (2). But under the law, authority to control - not actual control - is the standard used in determining a defendant's liability as an operator. The authority to control standard prevents a responsible party from insulating himself from liability by standing idle.
Applying this standard to PBS&J, the court declined to hold the firm liable as an operator, noting that PBS&J did not own any interest in or have any corporate ties to Munisport. Under its contract with Munisport, PBS&J prepared site plans and solid waste volume projections for the landfill, helped procure necessary permits and prepared training materials for the maintenance and operation of the landfill.
Although independent contractor status could not, by itself, shield PBS&J from CERCLA liability, the court found no evidence that the firm had actual control or the right to control Munisport's landfill operations. PBS&J employees did not actually handle the disposal of wastes at the site, and they had no authority to direct day-to-day landfill operations. While PBS&J could inspect the site and give advice on the placement of waste, Munisport officials made the final decisions.
The court further noted that CERCLA liability would be "stretched beyond its reasonable limits" if a consulting engineering firm in PBS&J's situation were deemed to be an operator. Such a ruling would "ensnare virtually all consultants and contractors who provide advice relating to a waste site," the court said.
On the closely related issue of generator-arranger liability, the court found no evidence that PBS&J arranged with a transporter for the delivery of hazardous wastes to the landfill site or that the firm had any control over the movement or disposal of wastes.