Unsafe sewage sludge or beneficial biosolids?: Liability, planning, and management issues regarding the land application of sewage treatment residuals

Boston College Environmental Affairs Law Review, Summer 1999 by Goldfarb, William, Krogmann, Uta

This new contractually-based system has changed the nature of sewage sludge management litigation. A new breed of lawsuits is evolving, which focus solely on contractual questions. For example, in City of Reading v. Wheelabrator Water Technology, Inc., a dispute arose relating to whether Wheelabrator was entitled to a "change order" requiring the City to compensate it for an unforeseen increase in the cost of performing the contract.483 A "change order" was defined by the contract as a written order to the contractor, signed by the owner, authorizing an addition or deletion to or revision in the work, or an adjustment in the contract price, issued after the effective date of the contract.485 After the contract was executed, it became evident that none of the sewage sludge collected from the city's wastewater treatment plant could be beneficially reused due to a problem with excess levels of molybdenum.484 Because all of the sewage sludge now had to be landfilled, the cost of performing the contract increased significantly. As a result, Wheelabrator requested a "change order" to the contract that would recognize these increased costs, but the city refused, arguing that it had sole discretion to either award or not award the order. Wheelabrator then requested arbitration pursuant to a provision within the contract. The arbitrator rejected the city's argument that Wheelabrator had assumed the risk of variations in the amount of reuseable sewage sludge, and awarded the change order. The district court upheld the arbitrator's decision.486 This case is a prime example of the types of legal issues likely to emerge in the sewage sludge field. It is conceivable that most future suits, whether or not they involve questions of liability, will involve the interpretation of contract provisions.

Another example of a contractual risk-sharing mechanism is the lease. Leases are often relied on in situations where "agricultural assessment" is employed in order to preserve farmland in rapidly developing areas. Under agricultural assessment statutes, owners of farmland pay property taxes based on the agricultural value of the land, as long as it remains in agriculture.487 If the owner wants to develop the farmland, he must pay a "rollback penalty" composed of the difference between property taxes based on agricultural and development value over a certain number of prior years.488

In states like New Jersey, which have adopted agricultural assessment strategies, farmland is typically sold by farmers to developers, who lease the land back to the farmer-seller until market pressure dictates development of the farmland. Until this occurs, the developer-lessor will hold the property while paying comparatively low property taxes and collecting rent from the farmer-lessee. Since the sale-leaseback transaction is a prelude to the ultimate development of farmland, such a lease typically contains a prohibition on the application of sewage sludge to the property under lease.

Even the New Jersey Department of Environmental Protection forbids sewage sludge application on lands subject to state-purchased conservation easements.489 In contrast, other divisions in the same Department favor sewage sludge application and regulate it as a fertilizer.490 These inconsistent sewage sludge management policies within a particular state agency are another example of conflicting and counterproductive attitudes towards land application of sewage sludge.