EPA’s Construction Industry Rule Has Liability Implications

By Theresa Pugh, Theresa Pugh Consulting, LLC

theresa-pugh-of-theresa-pugh-consulting-llcEPA and Construction Industry’s Jan. 19th, Construction General Permit Rule Needs Correction:

Last summer I wrote about EPA’s proposed rule on Construction General Permit (CGP) and the ridiculous requirements about testing for PCBs from caulk in all demolition debris.  The EPA had, perhaps with good intention, over-reached, because PCB in demolition debris is really quite rare. The CGP is a rule designed to address stormwater protection. EPA has legitimate authority and duty to address stormwater.

I commend EPA staff for correcting that misstep in the final regulation by fixing the PCB in demolition debris language. Their correction did no harm to the rule. They have focused the attention where it should be focused. However, there is still a serious flaw with the rule. The flaw has nothing to do with EPA’s environmental standard—which I don’t question. We need to regulate industries responsibly to protect streams.

The problem with the EPA’s Jan. 19, 2017 rule (literally the last day of the Obama Administration) is that it now applies joint and several liability to those in the industry for those engaged in virtually all earth moving activities. This EPA final rule is a big change from the 2008 and 2012 permit language that limits each operator’s liability to that portion of the site over which he/she had control. I think EPA went way too far in placing joint and several liability into the construction industry that often has many dozens of contractors and businesses in development projects. With joint and several liability, who would want to be the “last in” in the construction industry to build a home or building in a project that is adjacent to other construction projects. A construction company, doing no harm and following the new stormwater protection regulations perfectly, could possibly be liable for another company’s errors (intentional or unintentional) for up to $52,500 per day. It could also ruin a home builder’s reputation if he/she had to pay fines for someone else’s bad judgment. Joint and several liability will surely send a chill through the construction industry—at the very time we need more jobs. Most home builders are small businesses. Imagine the problems for many small businesses trying to get financing if joint and several liability applied to the company.

Just think of the comparable impacts if this was a remodeling regulation in your own community on homeowners. Would you want to be financially responsible for remodeling your own home if you were also held responsible for a neighbor’s home remodel if that neighbor didn’t follow all appropriate code? You don’t have the right to enter that neighbor’s home before you decide to remodel your house. You’d have no clue what they did or didn’t do in their home remodel. I think the comparison fits for development projects with many adjacent separate companies engaged in earth moving and building.

The Trump Administration presumably has an opportunity to further refine the stormwater regulation or CGP rule. I hope they will do so very soon. The new CGP permit took effect last week—on Feb. 16, 2017.  It is my hope that they will apply the Priebus Memo, take a look at the CGP, and fix the joint and several liability portion of the CGP rule. Unfortunately, for now, the rule is not listed on the Priebus Memo for the delay.

There is a commonsense solution that limits liability to bad actors and encourages construction projects to continue. We need both—more jobs and continued stormwater protection by EPA. Reasonable steps by EPA can ensure both.

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