Commencing Construction Projects in Kentucky Without Obtaining Stormwater Permits can be a Costly Proposition for Property Owners, Developers and Contractors

The 2009 stimulus package is expected to provide funds for a several large public and semi-public construction projects in Kentucky. For developers and contractors involved in those or other construction projects in the Commonwealth this year, however, the most significant “stimulus” they feel may be the “pain” in their pocketbooks if they commence their projects without first obtaining the necessary stormwater permits, or if they ignore their permit obligations during the construction of the project.

In a rare example of unison, experts, regulators and the regulated community all agreed approximately five years ago that the single greatest remaining obstacle to achieving the “fishable and swimmable” goal of the Clean Water Act was reducing pollutant loadings from stormwater runoff. Consequently, since that time U.S. EPA has expended significant resources to develop rules and permitting programs designed to control point source stormwater pollution from municipal storm sewer systems and commercial and residential development activities.

In order to maintain its program delegation from U.S. EPA, the Kentucky Energy and Environmental Cabinet, Department of Environmental Protection (DEP), developed a series of general stormwater permits, including one that applies to construction projects disturbing one or more acres. The permit for construction projects is available on DEP’s website at http://www.water.ky.gov/permitting/wastewaterpermitting/KPDES/storm/.  To obtain coverage, the property owner or operator (usually the general contractor or developer) must submit a completed notice of intent (NOI) form to the DEP at least 48 hours before construction begins, and prepare and implement a detailed, site-specific best management practices (BMP) plan to minimize pollutants leaving the site in runoff until the project is completed.

A stormwater BMP plan in Kentucky is far from a “boilerplate,” “window-dressing” exercise. The plan must contain all of the following elements, which must be completed and ready to go before submitting the NOI:

1. Identification of all locations on the site where sediment and other pollutants have the potential to enter stormwater running off the site;
2. Description of the construction activity, the order and timing of all expected major soil disturbing activities, the total project and total disturbance area, post-construction runoff coefficient, and soil composition and characteristics;
3. Site map, showing drainage patterns, slopes, and location of stormwater conveyance and control structures;
4. Description of all sediment and erosion control measures, including perimeter controls and structural practices, and soil stabilization practices, including geotextile fabrics, vegetation and revegetation, subject to specific timing requirements;
5. Description of storm water conveyance and management devices, including velocity dissipation devices (such as retention/detention ponds, vegetated swales, infiltration devices, and sequential systems) as necessary to maintain non-erosive flow consistent with the original physical characteristics of the site, and designed to capture and remove at least 80% of the sediment runoff that exceeds predevelopment levels;
6. Description of maintenance and inspection procedures for all stormwater control devices, practices and measures at the site, including identification of qualified personnel designated to conduct documented inspections at predetermined intervals, perform necessary maintenance, ensure compliance by all contractors and subcontractors with the BMP plan, and revise the plan if necessary to reflect changing conditions; and
7. Identification of all contractors and subcontractors required to implement any control measures identified in the plan, and a written certification by each contractor and subcontractor indicating, before it begins work at the site, that it understands its obligations under the general permit and plan.

Importantly, no property owner can “contract away” its state and federal stormwater permitting obligations. While a property owner is free to delegate its stormwater permitting obligations to a general contractor or developer, if neither party submits the required NOI form, or prepares the required BMP plan, both will be deemed liable for fines that can accumulate at the rate of thousands of dollars per day under the federal and state Clean Water Acts. Thus, a prudent property owner will protect itself with strong contractual language and regular oversight of all site activities.

Permitting obligations do not end when the contractors vacate and the developer “returns the key” to the property owner. Instead, a formal notice of termination (NOT) form must be completed and submitted to the DEP in order to end the permit obligations. Before submitting the form, however, all stormwater discharges must first be eliminated, or the site must have reached a state of final stabilization, with all temporary erosion and sediment control measures removed. “Final stabilization” is defined as the completion of all soil disturbing activities, and (1) establishment of a uniform perennial vegetative cover with a density of at least 70% over the uncovered areas, (2) use of permanent artificial stabilization measures such as riprap, gabions, or geotextiles, or (3) some combination thereof. The NOT form must be certified, and the DEP often conducts a follow-up inspection of the site to verify the conditions, particularly for large projects and sites that have been the subject of prior complaints by neighboring property owners.

To illustrate the significant, adverse consequences of failing to apply for coverage and comply with the DEP’s stormwater permit for construction activity, the authors were involved in a recent dispute in south central Kentucky involving major construction of several buildings and fields by a school district. The site was approximately 15-20 acres. Neither the school board, its general contractor, nor any of the contractors and subcontractors grading the site submitted the required NOI form before commencing construction (with one minor exception, demonstrating at least one subcontractor was aware of the DEP permit requirements). Nor was the required BMP plan prepared and implemented. Instead of instituting velocity dissipation devices and maintaining the site’s existing stormwater flow drainage patterns, stormwater falling on the site was rerouted to a single conveyance system entering a small stream at the rear of the site. The sheer volume and intensity of the resulting runoff quickly overwhelmed all efforts to contain and dissipate the flow, washing out riprap, dam structures and retention basins repeatedly, eroding deep gullies in the small stream, and carrying tons of sediment downstream to a lake area owned by a nearby housing development for senior citizens. At the housing development, a stream had been dammed to create a fishing lake for the residents and their families, complete with fishing pier and gazebo. The sediment filled more than an acre of the lake, completely surrounding the pier and gazebo in a sea of red clay.

The non-profit housing authority filed a citizen suit under the federal Clean Water Act, against the school board, its general contractor, and each subcontractor involved in any phase of grading or construction at the site, seeking civil penalties, injunctive relief, and legal fees and costs for failure to obtain the required stormwater permit. Because the stream was tributary to a large Kentucky river, and the sediment constituted the discharge of “dredge and fill” material under the Act, the claims included the failure to obtain a permit from the Army Corps of Engineers and separate injunctive relief designed to force the removal of the “fill” from the lake. State common law claims for negligence, nuisance and trespass were also filed as part of the suit. The school district and its contractors reached a settlement with the housing authority, agreeing to develop and implement additional stormwater controls and paying a large sum in damages and legal fees to the housing authority, including the cost to dredge the sediment from the lake.

A horror story, perhaps. A rare or unusual situation, maybe. But nevertheless true, and certainly an important wake-up call for Kentucky’s developers, owners and contractors. The attorneys at Frost Brown Todd provide skilled counseling to developers, industrial and commercial businesses, and local governments in all aspects of stormwater planning, permitting, pollution prevention, and regulation. These efforts minimize the risk of situations like that which faced the school district and its contractors. They also defend enforcement actions and private damage claims and, where appropriate, file such claims to recover damages and obtain injunctive relief. In addition, several of the firm’s environmental attorneys have science and engineering degrees, enabling them to provide important oversight of engineering firms, contractors and consultants involved in stormwater planning at construction sites.

Posted by: Stephen N. Haughey, Denise H. McClelland

Categories: Claims / Dispute Resolution, Construction Contracts, Current Developments / Legislation, Mechanics’ Liens