A national homebuilder was recently slapped with a $741,000.00 fine for Clean Water Act violations. This is obviously a substantial penalty, and I wonder whether it could have been avoided.

The EPA filed suit against national homebuilder, Toll Brothers, alleging over 600 storm water violations. The violations were discovered through site inspections and the EPA’s review of documentation submitted by Toll Brothers. You read that correctly, documentation submitted by the builder. I can appreciate violations found through site inspection findings– that can happen. But, violations based on the builder’s own documentation that the builder submitted to the EPA? That seems odd.

It makes me wonder what systems this builder had in place to respond to regulatory inquiries. Actually, it makes me wonder if this builder had any system in place at all to monitor its regulatory compliance and responses to regulatory inquiries. Certainly, any effective system would have cost substantially less than $740,000.

As I discussed in earlier posts, companies should maintain a contract administration system. The same is true here–companies should maintain a system for submitting documentation to any regulatory agency, including the EPA. This doesn’t have to be a fancy, computer based system. But, perhaps a designated employee, or a team, should be responsible for compiling the information necessary to respond to a regulatory request. Perhaps, this should even involve counsel.

Whatever system you have in place, try to avoid submitting paperwork on which a regulatory agency may base a civil penalty. I am by no means recommending lying about the paperwork submitted, but I am suggesting that the documentation should be reviewed to avoid, to the extent possible, adding fuel to the regulatory fire storm.