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Stormwater Management Regulations and Enforcement – A Tide of Recent Changes and Challenges


Among the many challenges facing construction contractors, the regulatory landscape of stormwater and runoff management is both broad and confusing.  Stormwater management is also potentially very expensive in the event of non-compliance.  In a nutshell, there are numerous Federal, State, Municipal, and independent agencies enforcing myriad laws and regulations with one goal:  Keeping local waterways free of pollution.  How they accomplish this, however, is not simple and rarely business friendly.

To wit, we have become aware of several recent judgments against local businesses by independent action groups seeking penalties and damages for stormwater runoff violations.  Such violations are typically unintentional and are quickly rectified by the offending party.  Despite this, the costs of litigation, compliance and settlement can quickly reach astonishing figures.  It is important to note that in general, in the event of a judgment losses for environmental remediation must be recorded and expensed for GAAP in the period the loss is estimable, but such expenses may not immediately be deductible for tax purposes.  This can create large timing differences between book and tax net income for affected businesses. There are also differences between book and tax guidance regarding the capitalization of certain costs related to compliance.

The linked Environmental Outlook article originally published in the Daily Journal of Commerce helps shed some light on why these judgments are becoming more common place.  Among them are renewed efforts to enforce the Clean Water Act, changes to the National Pollutant Discharge Elimination System permit process and compliance, and enforcement efforts by the Washington Department of Ecology:

http://www.djc.com/news/en/12045376.html