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June 9, 2009

Appellate Decision Orders State To Admit Contaminated Properties Into New York’s Brownfield Cleanup Program

By: Jeffrey B. Gracer — Filed under: Brownfield Cleanup, Land Use & Development, New York Environmental Law — Posted at 9:00 am

On Friday, June 5, the Appellate Division, Fourth Department, in Destiny USA Development, LLC v. DEC, CA 08—1855 (4th Dept. June 5, 2009), substantially upheld a lower court decision from Syracuse that:

  • Holds the New York State Department of Environmental Conservation (DEC) improperly interpreted the Brownfield Cleanup Act when it excluded contaminated properties from the state’s Brownfield Cleanup Program (BCP); and
  • The Fourth Department also upheld the lower court’s order requiring DEC to admit the properties into the BCP.

The Destiny decision expressly cited and followed reasoning adopted by two lower courts regarding DEC’s improper exclusion of contaminated properties in Manhattan from the BCP.  HLP Properties, LLC v. DEC, 21 Misc. 3d 658 (Sup. Ct. N.Y. Cty. 2008); East River Realty Co., LLC v. DEC, 22 Misc. 3d 404 (Sup. Ct. N.Y. Cty. 2008).   SPR is counsel to HLP and East River Realty.

In a case now pending before the Court of Appeals, the Fourth Department upheld DEC’s exclusion of property from the BCP when contamination present at a property was not sufficient in DEC’s judgment to require remediation.  Lighthouse Pointe Property Association, LLC v. DEC, 61 A.D. 3d 88 (App. Div. 4th Dept. 2009).  In Destiny, by contrast, DEC acknowledged that contamination was present at levels above cleanup standards and did not dispute that remediation was required; it sought instead to exclude the property based on non-statutory economic factors set forth in a DEC guidance document.  Quoting HLP and a Court of Appeals decision, the Fourth Department held that DEC could not exclude property that meets statutory eligibility criteria based on non-statutory guidance factors.

The Lighthouse decision is expected to be heard by the Court of Appeals in the fall of 2009.  Meanwhile, the Fourth Department’s recent decision in Destiny demonstrates that New York courts remain ready, willing and able to ensure that DEC follows statutory mandates and does not improperly exclude properties from the BCP.

Recently, however, legislation has been introduced in the New York State Senate that would retroactively cap the qualified tangible property tax credit available for successful litigants in pending BCP cases, but not provide increased site remediation tax credits afforded to other property owners under BCP amendments enacted in 2008.   Questions have been raised about whether such legislation is unconstitutional and represents unwarranted legislative interference with pending litigation.

SPR represents HLP and East River Realty in connection with their successful court challenges to DEC’s exclusion of their properties from the BCP, which are currently on appeal to the Appellate Division, First Department.  For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.