Tennessee Latest State to Address Stormwater Compliance for Foreclosures

As many of you know, lenders have been finding themselves subject to stormwater violations when they foreclose on uncompleted construction sites. In response, several states have issued guidance alerting lenders to their obligations when they take control of construction sites.Now, Tennessee has gone one step further and actually incorporated language into its general permit. The two key issues for lenders are if a new notice of intent (NOI) has to be filed and if the permit may be terminated.

Notice of Intent- For construction sites or portions of the sites where there is a new operator (i.e., new owner) after the initial Notice of Intent (NOI) is filed and the SWPPP has been submitted, a new NOI should be submitted as soon as practicable. The supplemental NOI must reference the project name and tracking number assigned to the initial primary permittee’s NOI.
However, if the site under the control of the new owner is inactive and all areas disturbed are completely stabilized, a new NOI does not have to be submitted. Instead, the NOI should be submitted prior to the commencement of construction by the new operator.If the transfer of ownership is due to foreclosure or a permittee filing for bankruptcy, the new owner (including but not limited to a lending institution) must obtain permit coverage if the property is inactive but not stabilized sufficiently. If the property is sufficiently stabilized, permit coverage will not be necessary until construction activity at the site resumes.Permit Termination- A permittee must request termination of coverage when the permittee no longer meets the definition of an "operator"(does not retain ownership or operational/design control of the entire site or portions of the site). Until the permit is terminated, the site must remain in compliance with this permit while a portion of a site has not been completed and is not finally stabilized. In such instances, one or more permittees must retain coverage for the unfinished portion or portions of the site.
If the new operator (e.g., lender) has no plans to engage in any construction activity in the foreseeable future, the primary permittee’s coverage may be terminated if the property is stable with perennial vegetation and sediment discharge does not have the potential to occur from the site. The permit coverage can also be terminated for portions of a permitted area that has been carved out to one or more subsequent operators who retain responsibility for site disturbance and permit coverage until final completion and stabilization. The termination of coverage will be effective when the replacement NOC has been issued to the new operator and the state has accepted a Notice of Termination (NOT) from the primary permittee.