Cambria Settles Major Wastewater Treatment Lawsuit

In October 2018, the Cambria Community Services District sued the engineering firm CDM Smith for failures in the design and functioning of the wastewater treatment facility and evaporation pond. After several years battling it out, they’ve finally reached a settlement in the lawsuit. In situations like these, wastewater treatment insurance ensures your clients can navigate the fallout when things don’t go as planned. For seven years, Cambria had to manage challenges stemming from a poorly designed system.

Facing Obstacles

Cambria is an emergency water desalination plant that was put into operation in 2014. Building the plant cost $13 million, and the district hired CDM Smith to design and build the facility. There were problems with the plant from the very beginning, primarily with the water basin and the discharge blowers. Just one year after opening, the facility had to be closed for two and a half months to have repairs done.

The work the district did on the facility was not enough. There were still problems with the discharge system, leading the Regional Water Quality Control Board to order Cambria to find an alternate method for discharging brine in 2016. The following year, the pond was decommissioned due to flooding issues.

Resolving the Lawsuit

After spending $500,000 on the original construction and design and then paying out an additional $500,000 to CDM Smith for repairs, the district sued the firm for $3.5 million for design flaws. The pond was not large enough to handle treating the brine discharge. After more than a year, the district and the firm reached a settlement agreement. On January 27, 2021, the two parties agreed to settle the case for $1.75 million.

Procuring Wastewater Treatment Insurance

The Cambria case is a good example of why your clients would benefit from obtaining insurance for water treatment companies. They need coverage that is tailored to the unique needs of wastewater treatment plants. Standard policies typically have exclusions for common issues these companies face, such as mold, Legionella, corrosives, and other contaminants. Specialized industry insurance does not carry these same exclusions, so your clients are covered for the issues they face.

With wastewater treatment insurance, they can obtain coverage for:

  • General and professional liability
  • Products and completed operations liability
  • Pollution liability that includes onsite, transport, and worksite HAZMAT coverages
  • Property insurance

These policies are essential for this industry and provide necessary protections, in addition to standard workers’ compensation, commercial auto and equipment coverage. As is becoming increasingly clear, infrastructure industries also need cyber liability insurance to protect them if their systems are hacked.

Wastewater treatment facilities provide their customers with a valuable service. When issues arise, the companies are at risk of legal repercussions, regulatory citations, fines, and interrupted services. While insurance doesn’t erase these problems, it puts the company in a better position to deal with them.

About Watercolor Management

Watercolor Management has insured the water industry for over 30 years. Our policies include unlimited defense cost coverage in the event of a lawsuit against you. Call us at (855) 929-0824 or email for a quick quote for your Water Business Professional, Products/Completed operations, Pollution and General Liability Insurance.