Aug 08, 2008

Lenders Foreclosing on Construction Sites

On August 1, 2008, the Georgia Environmental Protection Division issued a new and revised NPDES General Permit for Storm Water Discharges Associated with Construction Activities (“the General Permit”). The new General Permit becomes effective immediately and has a number of changes including a change that will significantly impact banks and other lenders foreclosing and/or acquiring legal title to construction or other development sites at which land-disturbing activities have been occurring.

Specifically, the new General Permit provides that “in the event that a lender or other secured creditor acquires legal title to the facility/construction site, such party must file a new NOI [Notice of Intent for coverage under the Permit] in accordance with this Part by the earlier to occur of (a) seven (7) days before beginning work at the facility/construction site; or (b) thirty (30) days from acquiring legal title to the facility/construction site.”

As a result of this important change to the General Permit, banks and other foreclosing lenders will become the named permittee under the General Permit and will be responsible for compliance with the Permit’s conditions including (i) ensuring that erosion and sedimentation controls at the site are properly designed, installed and maintained; (ii) conducting required water quality sampling and measuring rainfall events; (iii) conducting inspections of the site and maintaining relevant reports; and (iv) updating the Erosion, Sedimentation and Pollution Control Plan for the site. In addition, as the named permittee, the foreclosing lender must be aware of potential liabilities to governmental agencies and downstream property owners for failure to comply with the conditions of the General Permit.

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