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Squidward uses it to bulldoze Sam and Patrick after Sam completely destroys his house. Despite SpongeBob's resolutive obstruction, Squidward disregards it and puts SpongeBob down. As Squidward is about to win, Sam's strong nature was able to smash the bulldozer and throws it over to SpongeBob's house, destroying both in the process.
Squidward has a completely different bulldozer in Season 7.
The bulldozer has a continuity record: Squidward first uses it in "Opposite Day" and he still has it in "New Fish in Town." Then in "Big Sister Sam," Sam destroys it and throws it to SpongeBob's House.
It is unknown if Squidward still has a bulldozer after Sam destroyed it.