Good News For Real Estate Developers

August 2004

In the spring of 2004, the United States Environmental Protection Agency ("EPA") wisely decided to withdraw its proposal to radically change the storm water permitting system for real estate developers in this country.  Earlier, in July of 2002, EPA issued a proposed rule that would have created a new general permitting system incorporating elaborate inspection and certification requirements for owners and operators of construction sites.  However, after considering its own storm water modeling data and the comments of over one hundred organizations and individuals, EPA decided that the existing programs, regulations and initiatives at the Federal, State and local level will be more cost effective at controlling storm water discharges from construction sites than the proposed national effluent guidelines.

EPA's original 1990 storm water regulations identified construction sites as one of several types of industrial activity that required a National Pollution Discharge Elimination System ("NPDES") permit.  Those "Phase I" storm water regulations require operators of large construction sites to apply for an NPDES permit.  A large construction site is generally defined to be one that disturbs five acres or more, or is part of a common plan of development that will ultimately disturb five acres or more.  EPA and the States started issuing NPDES permits for storm water discharges from large construction sites in 1992.

In 1999, "Phase II" of the storm program extended the NPDES permit requirements to construction sites disturbing one acre or more.  Phase II regulations required smaller sites to obtain permits starting in March of 2003.  Collectively, Phase I and Phase II storm water rules now require permits for about 400,000 construction sites covering approximately 97.5% of the annual construction acreage in the United States annually.

Although construction sites may be regulated by either individual or general permits, the majority of construction site owners and operators have opted for general permits, which offer a simplified application process and provide for uniform performance requirements.  To be covered under a general permit, the developer need only submit a Notice of Intent ("NOI") to the appropriate permitting authority (typically the State in which the development is located).

While the specific provisions of State general permits can vary, they all generally require the permittees to: 1) prepare a storm water pollution prevention plan ("SWPPP"); 2) install and maintain best management practices ("BMP") to prevent soil erosion and control construction site runoff (such as silt fencing, inlet protection, check dams, sediment basins, sediment traps, and/or stabilization of soils); and 3) conduct periodic inspections of their constructions sites.  

In July of 2002, EPA proposed to establish effluent limitation guidelines ("ELGs") for discharges of storm water from construction sites similar to those imposed on industrial sites.  Those effluent limitation guidelines would have required implementation of certain control technologies to reduce the discharge of "conventional" and "toxic" pollutants.  Conventional pollutants include: biochemical oxygen demand ("BOD5"), total suspended solids ("TSS"), fecal coliform, oil and grease, and pH.

To determine the cost effectiveness of the proposed rule, EPA used computer models to show that the existing Phase I and Phase II permit programs were capable of controlling approximately 80% - 90% of the 100 million tons of sediment runoff from construction sites in the year 2003.  However, those same computer models estimated that implementation of the ELGs would remove only 1% more sediment at a cost of approximately $585 million annually.  Furthermore, EPA estimated that implementation of the ELGs could displace thousands of jobs per year, with most of that impact falling on small businesses.

In addition to its high cost, EPA's decision to withdraw the ELG proposal was also influenced by the minimal impact it would have on the nation's overall sediment problem.  According to the 2001 National Resources Inventory published by the U.S. Department of Agriculture, approximately 1 billion tons of sediment is discharged into surface waters from croplands each year.  Consequently, at an annual cost of $585 million, the additional 1 million tons of sediment that could be eliminated from discharges of storm water at construction sites would represent only 0.1% of the sediment discharged annually from the nation's croplands.

EPA's decision to withdraw its proposed ELGs for storm water discharges from construction sites is indeed good news for real estate developers and businesses in general.  It also shows the value of having affected organizations and individuals submit comments on future programs proposed by EPA.

Frost Brown Todd LLC has an Environmental Law Department with attorneys who are experienced in all areas of environmental law, including storm water permitting requirements.