Architects/Engineers and Environmental Liability

  1. The Theory

    The A/E industry likes to think it has protected itself.

    *AIA B141 (1987) 6 9.8:

    Unless otherwise provided in this Agreement, the Architect and Architect's consultants shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials in any form at the Project site, included but not limited to asbestos, asbestos, products, polychlorinated biphenyl (PCB) or other toxic substances.

    *EJCDC No. 1910-1 (1992 Edition) 6 8.7.3:

    ...&ob;T&cb;o the fullest extent permitted by law, OWNER shall indemnify and hold harmless ENGINEER and its officers, directors, partners, employees, and agents and ENGINEER'S consultants from and against all claims, costs, losses, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and all court or arbitration or other dispute resolution costs) caused by, arising out of or relating to the presence, discharge, release, or escape of Asbestos, PCBs, Petroleum, Hazardous Waste, or Radioactive Material at, on, under or from the Project site.

  2. The Reality

    An A/E or E/A can get nailed under CERCLA or at common law for any number of environmental problems associated with a construction project.

    *CERCLA section 107 (42 U.S.C. §9607) creates strict, joint, and several liability on the part of any person who by contract, agreement, or other means arranged for the disposal or treatment of a hazardous substance.

    STRICT means without regard to fault or negligence.

    JOINT AND SEVERAL means if you are an "arranger," you can be held liable for the whole cleanup bill, even if the mob-controlled disposal contractor who dumped the stuff in Lake Calhoun is bankrupt.

    ARRANGER means anyone who has the authority or ability to control or direct the handling or disposal of hazardous waste:

    .....a vice president / plant manager of mfg. co. who was aware of and did not prevent the shift supervisor's plan to dump dioxin on a neighboring farm is personally liable for cleanup costs. U.S. v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726 (8th Cir., 1986).

    .....the new lessee who directs the prior lessee's demolition crew to demolish a pesticide shed and push the debris into a hole which is later backfilled and paved is an "arranger" even though it didn't own the building materials which were buried. U.S. v. Aceto Agr. Chemicals Corp., 872 F.2d 1373 (8th Cir., 1989).

    .....A chemical supplier who learned that a chemical mfr. needs to dispose of accumulated dioxin and arranges for a disposal company to remove the dioxin can be held liable as an "arranger". U.S. v. Bliss, 667 F. Supp. 1298 (E.D. Mo. 1987).

    .....A grading contractor who unknowingly moved contaminated soil from one area of a site to another can be held liable as an "arranger". Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp., 976 F.2d 1338 (9th Cir. 1992).

    *A/Es sending their employees into potentially contaminated areas may have significant responsibilities, under OSHA and other regulations, to provide expensive training and protection.

    *Owners (in particular public owners) are requiring design firms to agree to take asbestos or other pollution abatement consulting activities under their "wings" as part of the prime A/E agreement.

    *Owners are asking design firms to agree in their contracts not to specify any product containing hazardous materials, which is an impossibility.

    *Professional Liability Insurance for A/Es hiring environmental consultants as part of an overall prime design contract is

    inadequate or nonexistent.
  3. The Solution.

    *Client Education. Most clients want the A/E to absorb environmental consulting for reasons of convenience, i.e., only one invoice to pay instead of two. A/Es can educate clients about the enormous risks being transferred to the A/E merely to make some bookeeper's life easier.

    *Risk Transferral. Indemnity clauses such as that in EJDC 1910 are of limited utility, depending upon the financial strength of the indemnitor and the scope of the applicable "Anti-Indemnity Statute," but they're better than nothing.

    *Proper Definition of Responsibilities. It's the Owner's land and building, not yours, and Owners shouldn't be permitted to get someone else to "own" their problem. Insist on proper contractual arrangements:

    Avoid engaging the environmental consultant directly. The Owner should retain and pay the consultant directly, even if you are "coordinating" the latter's services.

    All environmentally-sensitive decisions should ultimately be left to the Owner. E.g., if the Construction Documents call for the removal and transportation of hazardous materials from the site, the Owner or Contractor (and not you) should decide where to haul the stuff.

    Leave means and methods to the Contractor. If you have to specify remediation in your documents, the specs should be based on performance and qualifications criteria and should not tell the contractor what to do.

    Do not sign any environmentally-related documents (e.g., transportation manifests).

    Have any environmentally-related documents bound separately from your own.

    Insist the Owner test its facility before construction begins (this is the law, anyway).

    *Consultants. Make sure consultants are properly qualified and adequately insured.