Hovnanian shares rise; homebuilder agrees to pay $1 million to resolve pollution allegations

Hovnanian hits high after agreeing to penalty

WASHINGTON — Shares of Hovnanian Enterprises spiked to a 52-week high a day after the homebuilder settled with the government for $1 million over alleged Clean Water Act violations.

The government’s complaint alleged violations that included failure to obtain permits, or getting them after construction had begun at nearly 600 construction sites in 18 states and the District of Columbia.

Sites with permits had violations that included failure to prevent or minimize the discharge of pollutants such as silt and debris in stormwater runoff, investigators said.

With the conflict resolved between Hovnanian, the Justice Department and the Environmental Protection Agency, pending court approval, shares jumped 67 cents Wednesday, or nearly 12 percent, to close at $6.32 after reaching as high as $6.46.

The settlement requires Hovnanian, based in Red Bank, N.J., to develop improved pollution control plans for sites, conduct additional inspections and promptly correct any problems. The company must also properly train construction managers and contractors and designate trained staff for each site.

Hovnanian will start a program to improve compliance with stormwater run-off requirements at existing and future sites. The company must also start a management and internal reporting system to improve oversight and submit annual reports to EPA.

Part of the settlement helps EPA efforts to protect Chesapeake Bay. A total of 161 Hovnanian construction sites in the District of Columbia, Maryland, Virginia and West Virginia are in the bay watershed and are covered by this settlement.

Last month, Hovnanian Enterprises Inc. posted its first quarterly profit since 2006, largely on a huge tax gain.