Stormwater discharge, also known as stormwater runoff, has gradually become a much bigger problem in the United States than it has been in the past.
This is primarily due to the fact that as more and more land is developed, particularly in urban areas, the hydrology (or way that water flows) changes. With this change comes a rise in the number of areas where water from rain or melting snow cannot infiltrate into the ground. This leads to increases in the volume of stormwater runoff which carries with it pollutants such as fertilizers, pesticides, sediments containing pollutants from other sources, oils, and septic tank overflows, among others. In addition, highways, roads, and parking lots contribute stormwater discharges that contain combustion products from gasoline and heavy metals.
Because stormwater runoff is not treated to remove contaminants, these contaminants go directly into lakes, streams, rivers, and other waterbodies, often affecting their water quality as well as the plants and organisms that live in them. A study that was commissioned by the United States National Research Council in 2008 identified urban stormwater runoff as a leading contributor to water quality problems in the United States.
As discussed below, these stormwater management and stormwater discharges can result in significant liability.
Stormwater Discharge Effects
Some of the effects of contamination in waterbodies include:
- The destruction of aquatic habitats in sediments.
- Algae blooms as a result of nitrogen/phosphorous from manure.
- Bacteria or other pathogens causing beach closings.
- Debris suffocating aquatic life.
- People becoming sick from eating fish exposed to insecticides, paints, metals or solvents.
When stormwater discharges have impacted certain areas for a prolonged time and in large volumes, the affects can be catastrophic. Entire habitats can cease to exist or people that had used the waterbody for their livelihood or recreation no longer have access to the area.
Stormwater Discharge Regulation
The Environmental Protection Agency (EPA) regulates stormwater discharges under the Clean Water Act (CWA). Construction sites consisting of an acre or more of land must obtain permission from the EPA or local and state environmental regulatory authorities for these discharges.
But these entities are not the only ones that are regulated for their stormwater discharges. Municipal, industrial, and commercial facilities discharging wastewater or stormwater directly from a point source, such as a pipe, ditch, or channel are also regulated for their stormwater discharges under the CWA. The EPA is currently considering how to strengthen the stormwater regulations by determining what other entities should be regulated and which contaminants in their stormwater should be regulated.
As time goes on – these regulations will be targeting more sectors.
Many states have taken over regulation of stormwater from the EPA and have different benchmarks that are tested for in their constituents’ stormwater discharges. Many states are also in the process of reviewing their benchmarks and adding more contaminants to them than the ones that are most often regulated which include: oil, grease, zinc, copper, lead, E.coli, cadmium, chromium, nickel, and total suspended solids (as well as sediment mixed with any of these contaminants
Stormwater Discharge Claims
Although entities are regulated under the CWA for their stormwater discharge, claims may be brought against them under other environmental regulations if they negatively impact the environment or cause bodily injury to others.
For example, claims for the cost of remediating surface water (including sediments) contaminated by stormwater discharges may be brought under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). Liable parties under CERCLA include:
- Current owners and operators.
- Owners and operators of any vessel or facility at the time of the disposal of hazardous substances.
- Any person who arranged for the disposal or treatment of (the) hazardous substances.
- Transporters who selected the waste disposal location from which there has been a release.
The owner of a stormwater system can be classified as an “arranger” under CERCLA. There is case law that supports the classification of an entity that designed, implemented, and released contaminants via their stormwater system as an “arranger.”
In a case that was decided in 2010, the United States filed a claim against the Washington State Department of Transportation (WSDOT) because it had designed, constructed, and operated a drainage system for collecting highway runoff that drained into local waters. Although WSDOT asserted that it conducted a “federally permitted release” (which would have established a defense), the judge still took the steps to determine whether or not WS DOT could be held as an arranger under CERCLA. Although the judge determined that a fact question existed as to whether WSDOT could properly assert the “federally permitted release” defense, the judge still concluded that WSDOT had arranged for the disposal of hazardous substances. This was based on the fact that WSDOT had designed the system that discharged the runoff, had knowledge that the runoff contained hazardous materials, and released these hazardous materials into the environment. The judge determined that WSDOT could have designed the system or disposed of the runoff in a manner that would not have affected the environment. Although a decision was not made in this case, future plaintiffs’ attorneys may use the same logic to determine whether an entity may be found liable as an arranger under CERCLA, particularly one that does not have the ability to claim protection under the “federally permitted release” defense.
In another example of recent stormwater claims, a large grocery store chain was fined by the EPA under the CWA for lack of runoff controls and ordered to pay $120,000. In another case, an auto works facility was fined $33,000 for stormwater violations of the CWA related to improper truck washing. Additionally, a cement manufacturer was fined almost $500,000 for discharging toxic chemicals into their wastewater.
Insurance Protection Against Stormwater Discharge Claims
Environmental insurance products can be designed to protect companies against claims that result from inadvertent releases of stormwater discharges that adversely impact the environment. In some cases, these policies will respond to the subsequent fines and penalties that regulatory agencies may assess against them (as long as they are not intentionally noncompliant with environmental laws, the fines/penalties are not criminal fines/penalties, and coverage for fines and penalties is allowable by law).
Contractors Pollution Liability (CPL) coverage is designed to protect contractors against third party cleanup, bodily injury, and property damage claims for pollution events caused as a result of their contracting operations. When it comes to stormwater discharges, if a contractor participates in the design of the stormwater discharge plan or modifies the plan (even unwritten modifications conducted on the spur of the moment), and those changes impact the environment, a claim can be brought against them for professional liability. Very often, the line between contracting services and professional services becomes very blurred; in order to ensure that both contracting operations and professional services are addressed in an insured’s coverage, environmental insurers have developed combined CPL and professional liability policies. These can help to avoid coverage disputes related to contractor vs. professional services.
Premises Pollution Liability (EIL) coverage is designed to protect entities against first and third party cleanup, bodily injury, and property damage claims for pollution events caused as a result of activities at their owned or leased premises. Coverage can be designed to protect municipal, industrial, and commercial entities that discharge wastewater or stormwater directly from a point source which results in an inadvertent pollution release.
The author would like to thank the following attorneys for their contribution and review of this article:
Jennifer Sanscrainte, Short Cressman & Burgess PLLC, firstname.lastname@example.org
Irvin M. Freilich, Gibbons PC, email@example.com