“Riders in the Storm” – Stormwater Management – New Post Construction Regulations

As a result of North Carolina State Session Law 2006-246, developers will be subject to substantially more thorough stormwater management regulations in the immediate future.  The new regulations will further implement the federally required Phase II stormwater rules and also reach beyond those requirements in an effort to improve the reduction of pollution discharge into our state waterways.  The most significant impact of the new law is geographic reach.  Construction projects in several areas of the state not formerly subject to regulation will be responsible for compliance with the new rules.  The substantive changes to the post-construction requirements included in N.C.S.L. 2006-246 are also important, as they represent a significant reduction of the low density threshold for projects in certain coastal areas of the state.  A third significant impact of the new law is the expansion of potential liability to an owner or developer who fails to comply with the regulations or the terms of the applicable permit.  The purpose of this manuscript is to provide a brief background on authority for stormwater regulations in North Carolina and to summarize the significance of the changes to be imposed by N.C.S.L. 2006-246.  A few words about the process of transferring permits from developer to homeowners association, and also about the proposed Universal Stormwater Management Program are also included.

Source of Stormwater Management Regulation – The Clean Water Act

The purpose of stormwater management regulation is reduction of the discharge of sediment and other pollutants in to natural waterways.  The genesis of the authority for those regulations is the Clean Water Act.  The Clean Water Act prohibits the discharge of any pollutant into waters of the United States from a point source unless the discharge is authorized by a National Pollutant Discharge Elimination System (“NPDES”) permit.  “Point source” includes channelized stormwater runoff.  See NRDC v. Train, 396 F. Supp. 1393 (D.D.C. 1975), aff’d NRDC v. Costle, 586 F.2d 1369 (D.C.Cir. 1977). 

Permitting is the fundamental mechanism for enforcement of stormwater regulations.  The Environmental Protection Agency (“EPA”) established the NPDES permit program, as required by the Clean Water Act.  Under this program, permits are issued by either the EPA or the authorized body of state government if the state has been given permitting authority by the EPA.  North Carolina was granted NPDES permitting authority in 1975, and such permitting authority was delegated to the Department of Environmental and Natural Resources Division of Water Quality (“DWQ”) for implementation in North Carolina. 

Generally speaking, there are two types of permits, General Permits and Individual Permits.  General Permits authorize specific categories of discharges and contain certain requisite criteria permitees must follow.  A potential discharger of pollutants must file a Notice of Intent to apply for coverage under a General Permit.  Individual Permits authorize a specific facility to discharge stormwater subject to certain site-specific conditions.

Federal Phased Stormwater Rules

The Federal stormwater management requirements were imposed in two phases.  The first phase focuses on operations and planning to reduce pollutant sources by regulating stormwater discharges from industrial facilities, municipal separate sewer systems (“MS4’s”), and  large construction activities.  See 40 C.F.R. § 122.26(a).  Under Phase I, construction activity that disturbed five acres or more of land was subject to stormwater management regulation.  The second phase built on the Phase I program by regulating stormwater runoff from smaller MS4’s and construction sites in a greater number of designated urban areas.  See 40 C.F.R. § 122.34.  Phase II also reduced the threshold minimum size of a regulated construction project from five acres to one acres.  Enforcement under either phase requires NPDES permits and the implementation of stormwater discharge management controls that reduce or prevent the discharge of pollutants into receiving waters. 

Impact of Recent North Carolina Legislation on Construction Activities

The most recent iteration of North Carolina stormwater management law is embodied in North Carolina Session Law 2006-246 An Act to Provide for the Implementation of Federal Phase II Stormwater Regulation and to Protect Water Quality.  Compliance is mandatory under this new law beginning on July 1, 2007.  The session law changes the landscape of stormwater management regulation in three significant way: (i) it increases the geographic areas subject to stormwater management regulation; (ii) it imposes significant changes to the post construction permit requirements for projects draining to Shellfish Resource Waters in urbanized areas and in “tipped” counties; and (iii) it increases the potential liability for those who violate the regulations.

The new stormwater management law significantly extends the geographic coverage of stormwater management regulations in North Carolina.  The new law incorporates the urbanized areas designated by Phase II of the federal program and also extends the reach of the regulations beyond those required areas.  Under the Phase I regime, six cities and one county (Cumberland) were subject to stormwater management regulations.  Now, 123 additional cities are subject to the regulations as a result of implementation of Phase II.  In addition to these cities, the new North Carolina law will apply stormwater management regulations to twenty-six “tipped” counties.¹  These counties are included pursuant to a mathematical formula set forth in the new law.  See N.C.S.L. 2006-246 § 4(a)(a)(4).

After July 1, 2007, “development”² activities that require either a Sedimentation Erosion Control (“SEC”) plan or a Coastal Area Management Act (“CAMA”) permit within certain regulated areas must limit built-upon areas³ and employ stormwater management practices.  Those regulated areas include: (i) developments within the twenty coastal counties (see Exhibit A); (ii) developments draining to Outstanding Resource Waters (“ORW”) or High Quality Waters (“HQW”)(see Exhibit A); or, (iii) developments located in the Phase II urbanized areas and municipal spheres of influence, or in a “tipped” county as described under the new law (see Exhibit B).  Needless to say, determination as to whether one’s development is located within those regulated areas (and if so, which regulations apply) is a challenging task.  DWQ is typically quite responsive to requests by phone to assist in that determination.  It also maintains website that will soon include an interactive map where an interested party may enter a street address or longitude and latitude information for a development to identify the applicable regulations.  That website may be found at http://h2o.enr.state.nc.us/su/msi_post-construction.htm. 

The new law also imposes more stringent requirements for post-construction permits, particularly those for projects that drain to Shellfish Resource Waters (“SR Waters”).  Shellfish Waters (“SA Waters”) are designated by the state.  SR Waters are a subset of SA Waters and are identified based upon a scientific test for salinity (SA Waters that contain an average of 500 parts per million of natural chloride ion are SR Waters).  According to DWQ, the developer will be responsible for collecting a sample of the receiving waters and arranging a certified test of the same.  The sample and test results are to be submitted along with the permit application.  Under the new law, the threshold percentage of built-upon area under which a development may qualify for a low density permit is reduced from 25% to 12% for developments within ½ mile or draining to SR Waters.  This threshold is also reduced for developments draining to SA Waters.

The distinction between a high density development and a low density development is critical.  Under a low density permit, stormwater is controlled primarily by vegetated conveyances, where high density developments typically require a structural best management practice (“BMP”) such as an infiltration system or detention pond.  The BMP’s required by a high density permit must be designed to collect and treat the runoff for a requisite amount of rainfall to remove 85% of the total suspended solids.  That amount of rainfall varies based on the location of the development and the classification of the receiving waterway.  Structural BMP’s typically required by a high-density permit also may require an operation and maintenance plan.  Low density permits do not need to be renewed, but high density permits must be renewed every ten years.  The renewal typically requires recertification of the BMP utilized.  Thus, the construction, implementation and maintenance of stormwater management system authorized under a high-density permit is much more complex and expensive than under a low-density permit.

The restrictions for projects within the Coastal Counties covered by the new law are as follows:

The restrictions for projects covered by the new law and outside of the Coastal Counties are as follows:

Exceptions to the Post Construction Regulations

The new law identifies some important exceptions to the new post-construction regulations for development in progress and for redevelopment.  See N.C.S.L. 2006-246 § 8.  Development that would otherwise be subject to the new requirements is exempt if performed pursuant to one of the following authorizations (provided the authorization is obtained prior to the effective date of the pertinent requirements):

1. A building permit issued pursuant to G.S. § 153A or G.S. § 160A-417;
2. A site-specific development plan, as defined by G.S. § 153A-344.1(b)(5) and § G.S. 160A-385.1(b)(5);
3. A phased development plan pursuant to G.S. § 153A-344.1, subject substantial conditions;
4. A vested right to the development under G.S. §§ 153A-344(b), 153A-344.1, 160A-385(b), or 160A-385.1 issued by a local government that implements the new post-construction requirements; or
5. A vested right at common law.

Redevelopment is also excluded.  “Redevelopment” includes any land-disturbing activity that does not result in a net increase in built upon area and that provides greater or equal stormwater control than the previous development.  Thus, a project that has been approved prior to July 1, 2007, or that qualifies as a redevelopment, may be exempt from the new more stringent regulations.

Increase in Potential Liability Under New Law

The terms of the regulations, permit and land restrictions may now be enforced pursuant to statute by adjacent and downstream landowners in addition to the State.

Restrictions may be enforced by any owner of the land on which the best management practice or project is located, any adjacent property owners, any downstream property owners who would be injured by failure to enforce the land-use restriction, any local government having jurisdiction over any part of the land…, without first having exhausted any available administrative remedies.  N.C.G.S. § 143 214.7, as amended by S.L. 2006-246 § 16(b)(emphasis added).

This provision has not yet been tested, but the increase in potential liability is substantial.  Adjacent and downstream land owners now have a direct cause of action against a permittee for failure to construct, maintain or operate the BMP’s utilized on a  development.

Transferring Stormwater Permits

There are three essential requirement for transfer of a stormwater permit from the developer to a condominium owners association or homeowners association.  At the close of a project the developer is typically eager to transfer the permit and separate itself from the potential liability associated with the permit and the stormwater management BMP’s.  Homeowners associations often believe, mistakenly, that receipt of the permit is in their best interest.  In order to protect the new owners and ensure that the BMP’s are properly installed and maintained, DWQ has established certain prerequisites to transfer of the permit to a homeowners association.  First, the stormwater management BMP’s must be recertified.  This recertification may be performed by a private third party engineer or by the State, though there is typically a significant lag time associated with review by the state engineer.  Second, the permit may not be transferred until the control of the association is in the property owners’ hands.  DWQ uses the sale of 50% of the lots or units as the indication of this shift of control.  Beginning in 2003, DWQ began allowing an optional transfer at 33% sell out if the developer posted a bond or letter of credit to assure maintenance would be performed until the later of (i) two years beyond the date of the transfer, or (ii) sale of 50% of the lots.  Third, in a planned community, conveyance of the real property including the stormwater management facilities to the entity to whom the permit is transferred is recommended.

After the transfer of the permit to the property owners association, the association is bound by the terms of the permit and the property owners will continue to be bound by certain required deed restrictions imposed by the permit.  These restrictions typically include: (i) the maximum allowable built upon area for each lot; (ii) prohibition against filling in or piping of any vegetative conveyances (ditches, swales, etc.); (iii) requirement for maintenance of a 30′ wide vegetated buffer between all impervious areas and surface waters (if applicable); and (iv) a prohibition against alteration of the drainage for the facilities designated in the permit and shown on any accompanying approved plans without the prior written consent of DWQ.  Thus both the property owners association and the individual owners are required to comply with the essential elements of the permit.

Proposed Universal Stormwater Management Program

DWQ is currently promoting a new Universal Stormwater Management Program designed to simplify stormwater management regulations statewide and impose arguably more stringent restrictions.  The focus of the proposed universal program is on the control of stormwater flow as opposed to the limitation of impervious surface.  Stormwater management regulations in North Carolina are indeed complex.  In addition to the Phase II post construction regulations implemented by the new law and discussed in this manuscript, there are also several specific programs for specific waterways (including the Tar-Pamlico Rivers, Neuse River, and Randleman Lake).  See Exhibit C.  The proposed universal program would simplify regulation by imposing the restrictions necessary to meet all of the specific programs statewide.  The proposed program also eliminates the distinction between low density and high density projects and requires control and treatment by means other than vegetative conveyances.  It would apply to all residential development activities on one acre or more and all commercial development activities on one-half acre or more, and would impose a 36% absolute density limit in watershed critical areas.

© 2011, Ward and Smith, P.A.

For further information regarding the issues described above, please contact Samuel B. Franck.