The 1987 amendment to the Federal
Clean Water Act has proven to have
far-reaching implications for San Diego County construction firms and anyone needing construction.
In January 2007, the San Diego Regional
Water Quality Control Board adopted a
revised National Pollutant Discharge Elimination System (NPDES) permit that requires local governments to further control
urban sources of water pollution. As the
effects of the amendment trickle down,
many business and all new construction
projects will be directly impacted.
The permit requires the proper management of runoff from rain and even housekeeping and gardening activities. In some
cases, the runoff will need to be treated on-site before it can be released into the municipal storm drain system. Such treatment will
require the local installation and maintenance of a water treatment system. The permit requirements will add to the construction
costs of new homes or typical business development projects such as new parking lots.
“The new permit requirements not only
are more extensive, but they require measures of effectiveness,” says John Lormon,
chair of the Environmental and Land Use
Practice Group at Procopio, Cory,
Hargreaves & Savitch LLP. “All of this will
have an impact on costs for homeowners,
businesses and taxpayers.”
Smart Business spoke with Lormon
about the business effects imposed by the
permitting requirements and how CEOs
can prepare for the changes.
How will the new urban runoff management
program affect the construction industry?
The construction industry will be affected
in several ways. For example, that industry is
going to see changes in terms of how much
land can be graded at any one time.
Because grading can alter the amount of
runoff water and the pollutants contained
in that water, the permit may only allow for
a limited disturbance of land at one time.
This could affect construction time lines
and potentially project costs.
There are also implications for low-impact
development projects such as the construction of restaurants, parking lots or office
buildings. When you convert ground that previously absorbed runoff to hardscape, you
are changing the volume, velocity and makeup of the runoff. This change is a major concern for water quality regulators; thus, new
restrictions are being imposed on development.
Creating additional hardscape can also
cause runoff to alter streams, banks and
beds, changing habitats. Where site development exceeds 50 acres, the project proponent will be subject to additional
requirements, including development and
compliance with a hydromodification plan.
In time, most projects will be subject to
these requirements.
The permit requires the local government
to reduce the discharge of pollutants in urban
runoff to the maximum extent practicable
through various management practices [such
as treatment and development of management plans], and these requirements will be
passed down from local governments to
development projects through ordinances
and the land use permitting processes.
These same water quality issues will
affect environmental review and could create new mitigation requirements, further
adding to project costs.
Are there wider-reaching implications?
Certainly, CEOs should expect to see some
of these costs passed through to them under
triple net leases, and the permitting process
may slow down new construction projects or
build-outs. The cost impact may not be as
immediate for CEOs who lease building
space, but as those buildings undergo renovation, or if the CEO relocates or expands the
business, there is the potential for impact.
Also, the agencies have developed
stormwater civil and criminal enforcement
initiatives. Wal-Mart recently paid a storm-water violation penalty of $3 million.
How will this impact the cost of doing business and the cost of construction?
The building industry says that this may
add as much as $30,000 to the price of a new
home. Other estimates project a $100,000
cost of construction increase for office
buildings, while the cost to government and
taxpayers is projected to be $250 million
over the five-year life of the current permit.
What should CEOs do in anticipation of this
urban runoff management program?
First, they should pay careful attention to
site selection and keep both the stormwater quality impacts and the potential cost
escalation in mind.
Second, they should anticipate that new
construction might be slowed or impacted
by the permitting process.
Third, as CEOs look at all new real estate
transactions, they should do their due diligence and strongly evaluate projects that
might result in hydromodification or treatment requirements.
Fourth, the SEC requires public companies to disclose environmental liabilities.
Last, keep budgets in mind. All of these
changes are a consultant’s dream, and any
time there are uncharted waters to navigate, consultants are usually hired to help
pave the way.
JOHN LORMON is chair of the Environmental and Land Use
Practice Group at Procopio, Cory, Hargreaves & Savitch LLP.
Reach him at [email protected] or (619) 515-3217.
