How Developers Fund Public Water Supply Expansion: The Role of Fudiciary Duty in Groundwater Consulting Services

Growing communities reliant on groundwater and underlain by fractured bedrock have come to view new groundwater supply sources with apprehension. This apprehension often is not specifically drought-related, though recent  Mid-Atlantic  droughts focused keen attention on differences between initial estimates and the long-term sustainable yield of community  wells intended to support growth.

Often new groundwater sources are developer-funded. Some municipalities and utilities engage groundwater professionals themselves, often subject to developer reimbursement. Others task the developer with engaging groundwater consultants directly. In the latter case, the systems seek simplicity and perceive benefit by not being in the “responsibility” loop for unpredictable costs or unsuccessful outcomes. As hydrogeologists serving both public and private sector clients, we see both sides of developer-funded water development efforts.

Developers seek an assured return on investment with little downside risk. Notwithstanding the challenges of groundwater exploration in fractured bedrock, developers focus on the issuance of permits, lot recordation and the release of building approvals. Consultants engaged by developers necessarily focus on these goals as well, based on the fiduciary nature of the developer-consultant contract.

Conversely, communities seek long-term operational reliability, redundancy and excess capacity for other ancillary uses. Developer and municipal priorities rarely coincide; only the most visionary of agreements between the two encompass the inherent variables. Furthermore, municipal requirements may not be reflected in the developer-consultant contract. 

Projects differ in design and outcome based on whether the hydrogeologic work is developer-funded and controlled.  Drilling and testing program designs often differ depending on the entity with whom the consultant has a fiduciary relationship. We will present several recent examples of this inherent conflict from around the Mid-Atlantic region. We then will recommend specific measures to overcome this inherent conflict in groundwater consulting project design.