Last week the Environmental Protection Agency and the Justice Department announced that four homebuilders had agreed to pay more than $4 million dollars as a result of “alleged violations of the Clean Water Act,” including failing to obtain permits for some sites and discharging silt and debris in the runoff from others.
To some in the construction field, this might seem like kicking an industry when it’s down, as the builders—Centex Homes, KB Homes, Pulte Homes, and Richmond American Homes—are no doubt feeling the effects of the housing downturn. The settlement sends a message to the industry, though, much as the Wal-Mart Stores $3.1 million civil penalty did in 2004 and, more recently, Home Depot’s $1.3 million payment a few months ago: the EPA is still watching, and there’s no free pass even in a tough economy.
In addition to the money the builders will pay, EPA’s statement on the settlement says “The companies also have agreed to implement company-wide compliance programs that go beyond current regulatory requirements and put controls in place that will keep 1.2 billion pounds of sediment from polluting our nation’s waterways each year.”
Each homebuilder is paying a portion of the total penalty, ranging from just under a million and a half dollars to a little less than $800,000. Considering that the average sale price of a new home in the US as of a month ago was just over $200,000, the financial penalty doesn’t seem unbearable for companies of this size. (One company, Pulte, agreed to carry out a $608,000 habitat restoration project in addition to the fine.)
However, the increased compliance might be more painful, considering the new procedures the companies will have to put in place, the training programs they’ll need to set up, and the additional money they’ll likely be spending on erosion and sediment control and on internal inspections at their job sites. These things together might well end up costing them considerably more than the fines.
So what sends the stronger message in this case—the fines, or the new standards for compliance?