State requirements can vary, and so can their approaches. For example, in California, the State Regional Water Quality Control Board evaluates the termination notice and typically accepts it if it meets 70-percent coverage of disturbed areas. Once the notice of termination is approved, the owner becomes responsible for best-management-practices maintenance at the site until it is sold or construction activities are reinstated. At that point, the owner then must reapply for the notice of intent with an upgraded SWPPP.

Noncompliance penalities

Regardless of whether or not construction is resumed, a property's new owner must ensure that proper site-management occurs. In either case, if noncompliance issues arise, significant penalties can be assessed, potentially on a per-day basis. Enforcement actions typically begin with written warnings, notices of correction or both. Further enforcement actions often will be issued based on continuing violations of the permit conditions, significant discharge of pollutants or both.

California's regulatory board, for example, may issue administrative citations in the case of negligent discharge or pollution with fines of as much as $10,000 per day and $10-per-gallon discharge for each permit violation. Violation examples include lack of inspection records, inadequate documentation, inadequate best management practices and inadequate staff training.

Municipalities typically oversee construction activities to ensure compliance with local and state requirements. They may refer repeat offenders to the state for enforcement and potentially steeper fines and penalties. In addition, the EPA can issue fines of as much as $32,500 per day for unintentional violations; as much as $55,000 per day for intentional violations; and criminal liability and responsibility for cleanup costs.

If violators do not comply with the CWA or with the regulatory agency's enforcement, then they are subject to a citizen suit by any person or entity that is or might be adversely affected by the violations. Citizens can seek injunctive relief (i.e., court orders that prohibit pollution from continuing), civil penalties, and reimbursement of legal costs and attorney's fees.

Ultimately, issues with stormwater compliance in commercial developments as they affect pre- and post-foreclosure ownership are twofold. First, as with all environmental-due-diligence assessments, the goal is to understand the current site conditions with potential and future liabilities in mind. Second, along with preparing a current assessment, it is critical that new owners comply properly with the multifaceted regulations and requirements to avoid violations and incurring costly fines.

By working with qualified environmental professionals, brokers can help their clients who are purchasing foreclosed-upon properties navigate this complex process safely, thereby mitigating financial liabilities associated with stormwater compliance.

Orion Alcalay is vice president of due-diligence services with AEI Consultants, a national environmental and engineering due-diligence firm. AEI services national and regional lenders, equity firms, brokers, private parties and developers. Alcalay has more than 10 years of experience in the environmental-service industry and is responsible for ensuring the consistency and quality of due-diligence services throughout AEI. Contact Alcalay at (925) 746-6012 or oalcalay@aeiconsultants.com.

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