LEGALLY SPEAKING ENVIRONMENTAL LAW SERIES: Indemnification Against Release/“Disposal” of Hazardous Materials It is very common, if not nearly an industry standard, for construction contracts and subcontracts to contain provisions addressing the discovery of unanticipated hazardous materials. Many of these provisions require a contractor or subcontractor to discontinue work where hazardous materials are discovered. An example of such a clause can be found in the American Institute of Architects (AIA) Document A201 (2017), Section 10.3.1, which states in part: If the Contractor encounters a hazar- dous material or substance not addressed in the Contract Documents and if reasonable precautions will be inadequate to prevent foreseeable bodily injury or death to persons resulting from a material or substance, including but not limited to asbestos or polychlorinated biphenyl (PCB), encountered on the site by the Con- tractor, the Contractor shall, upon recognizing the condition, immedi- ately stop Work in the affected area and notify the Owner and Architect of the condition. A similar clause in ConsensusDOCS does not require the contractor to stop work, but provides that the “Contractor shall not be obligated to commence or continue work until any Hazardous Material discovered at the Work site has been removed, rendered or determined to be harmless by the Owner as certified by an independent testing laboratory and approved by the appropriate government agency.” While these types of clauses afford some level of protection to the contractor or subcontractor, alone they do not address: • Liability for releases or discharges of hazardous materials occurring before materials are identified as hazardous and/or indemnification against claims asserted by third parties for the release of hazardous materials. • The exposure of the contractor’s or subcontractor’s employees to such hazardous materials. • The effect of hazardous materials on the contractor’s or subcontractor’s ability to perform work. • Entitlement for delays caused by the suspension of work or for costs associated with changes caused by the presence of hazardous materials. In the November/December 2019 issue of Deep Foundations, this column addressed liability under the Comprehensive Envi- ronmental Response, Compensation and Liability Act (“CERCLA,” or “Superfund”) for the release or disposal of hazardous materials. CERCLA defines “disposal” to include the: discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters. While a contractor cannot contract away its liability to the government under environmental laws, a contractor is free to seek protection from third parties, including an owner, for such liability. Brian S. Wood, partner, and Miranda Millerick, law clerk at Smith Currie As discussed in the prior column, a 1992 decision of a federal appeals court in the case, Kaiser Aluminum & Chemical Corp. v. (9 Cir. 1992), applied an expansive Catellus Development Corp., 976 F.2d 1338 th Court of Appeals for the 9 Circuit held a contractor liable under CERCLA as an “operator” of a facility and disposer and “transporter” of hazardous materials, reasoning that the contractor had transported and disposed of the materials by virtue of handling and moving soils on the construction site. The contractor operated the “facility” (jobsite) because the contractor “had authority to control the cause of the contamination at the time the hazardous substances were released into interpretation of “disposal.” There, the th Appeals for the 11 Circuit applied the same reasoning to hold that “ ‘disposal’ may occur when a party disperses contaminated soil during the course of grading and filling a construction site.” Redwing Carriers, Inc. v. the environment.” In 1996, the Court of th 12 (11 Cir.1996). In 2011, a federal court held that disposals are not limited to the initial release or dispersal of hazardous materials, “but instead include times when hazardous materials are moved or dispersed,” as work that “redistributed the soil … spread the contamination on the Site.” Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 791 F.Supp.2d 431 (2011). Saraland Apartments, 94 F.3d 1489, 1511- th DEEP FOUNDATIONS • JAN/FEB 2020 • 105
