More Companies May Soon Be Liable for Stormwater Discharges

Articles & Publications

DRI: The Critical Path
April 14, 2017

One of the longest-standing protections a construction subcontractor on multi-party construction sites relies on is the relinquishment or tender of control when its portion of a project is completed. While documenting that transition is still no doubt beneficial for a number of reasons, it may no longer provide protection from one of the more expensive claims that could arise on larger projects—the violation of a Construction General Permit (CGP) for Stormwater Discharges from Construction Activities issued either by the United States Environmental Protection Agency (EPA) or a similar state agency. Such a violation could result in a civil penalty up to $51,570 per day per violation. Given the extreme risk posed by liability for stormwater discharges and the standard pollution exclusion in most general liability insurance policies, it is important that any construction company that has supervision and control over projects larger than one acre is aware of the changes to its potential liability.

The increased potential for liability arises from the newly effective CGP, which replaced the expiring 2012 version. Although the new administration has promised a reduction in regulation and a more limited role for the EPA, the 2017 CGP became effective on February 16, 2017. Although many states are not directly covered by the CGP, most state construction stormwater permitting statutes and stormwater permits are modeled off of it. Since the new CGP remains in effect for the next five years, many of its changes will likely be implemented in state regulations as they are updated. Construction companies and their attorneys should be aware of the 2017 CGP changes, including the potentially drastic change in the liability structure for violations.

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