OLYMPIA — A legal argument about stormwater requirements for new construction was resolved last week in favor of homebuilders and local governments, but the outcome disappointed clean-water advocates.

Tuesday’s 2-1 ruling from the state Court of Appeals Division II affects a new federally mandated drainage code that took effect Friday. Instead of adhering to new low-impact design requirements to reduce storm runoff in urban areas, the decision will allow projects to be built under rules in place when permits were submitted, even years earlier. The same principle applies to land-use regulations in Washington and is known as vesting.

“Having to redesign a project would have meant financial ruin for many (of our members),” said Mike Pattison, a lobbyist for the Master Builders Association of King and Snohomish Counties.

The case stems from an October 2013 decision by the Pollution Control Hearings Board.

Board members decided that the stormwater rules are environmental regulations rather than land-use ordinances. The official name for the regulations is a mouthful: the National Pollutant Discharge Elimination System,usually referred to in shorthand as NPDES.

Snohomish and King counties appealed the board’s ruling, along with the Building Industry Association of Clark County.

On the other side were the Department of Ecology, Puget Soundkeeper Alliance, the Washington Environmental Council and the Rosemere Neighborhood Association.

The appeals court sided with the counties and the builders by overturning the pollution hearings board decision.

Environmental groups were disappointed.

“I think it’s significant, because under this interpretation of the law, developers can continue to build under outdated standards that don’t protect clean water,” said Jan Hasselman, a Seattle attorney with the nonprofit law firm Earthjustice, which worked with the Puget Soundkeeper Alliance on the case.

The state tried to strike a balance for developers by giving them a five-year grace period to develop projects under the outdated rules and to avoid a rush of permit applications before new rules take effect, he said.

The new drainage code differs from the old one by requiring low-impact development whenever feasible. That means more rain gardens, stormwater vaults and permeable pavement for all new development in the county.

State officials are considering whether to ask the state Supreme Court to take up the issue.

“On the face of it, the decision appears to allow some developers to construct some projects without using stormwater-control techniques that are necessary to reduce stormwater pollutants to the maximum extent practicable, as required by the federal Clean Water Act,” said Sandy Howard, a Department of Ecology spokeswoman.

Noah Haglund: 425-339-3465, nhaglund@heraldnet.com. Twitter: @NWhaglund.