February 23, 2010
On February 18, 2010, New York’s highest court held in Lighthouse Pointe Property Associates LLC v. New York State Dep’t of Envtl. Conservation, — N.E.2d –, 2010 WL 546058 (N.Y.), 2010 N.Y. Slip Op. 01377 (Feb. 18, 2010) (“Lighthouse”), that the New York State Department of Environmental Conservation (“DEC”) improperly excluded property in Monroe County from the Brownfield Cleanup Program (“BCP”). DEC contended that the property was not eligible for the program because the level of contamination was not sufficiently high to warrant admission into the BCP.
Rejecting DEC’s argument, the Court emphasized the expansive nature of the BCP statute, which defines eligible property, or a brownfield, as “any real property the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant.” N.Y. Envtl. Conserv. L. § 27-1405. The Court noted that this “low eligibility standard” is “consistent with the statute’s legislative history,” which evinces the statute’s aim of remedying development disincentives arising from strict, joint, and several liability for environmental cleanups. The Court declined to remit the matter to DEC for further consideration, and ordered the property admitted into the BCPbased on the extensive record supporting eligibility.
The Court of Appeal’s decision in Lighthouse is consistent with three recent brownfield decisions in which the Appellate Division struck down DEC’s efforts to exclude property from the BCP based on factors not provided in the BCP statute. In HLP Properties, LLC v. New York State Dep’t of Envtl. Conservation, — N.Y.S.2d –, 2010 WL 455321 (1st Dep’t Feb. 11, 2010) (“HLP”) and East River Realty Co., LLC v. New York State Dep’t of Envtl. Conservation, 68 A.D.3d 564, 891 N.Y.S.2d 359 (1st Dep’t Dec. 17, 2009) (“ERRC”), the First Department rejected DEC’s argument that the property in question did not meet the eligibility criteria for a “brownfield” because the site would have been remediated even without participation in the BCP. In Destiny USA Dev., LLC v. New York State Department of Envtl. Conservation, 63 A.D.3d 1568 (4th Dep’t June 5, 2009) (“Destiny”), the Fourth Department rejected DEC’s efforts to exclude property from the program based on non-statutory economic factors set forth in a DEC guidance document.
The Lighthouse decision reflects that New York courts will properly ensure that DEC follows statutory mandates and will invalidate improper exclusion of properties from the BCP.
SPR represented HLP and ERRC in connection with their challenges to DEC’s exclusion of their property from the BCP. For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.
February 16, 2010
On Wednesday, February 11, the First Department of the New York State Supreme Court, Appellate Division, held for the second time that the Department of Environmental Conservation (“DEC”) improperly excluded a Manhattan property from the Brownfield Cleanup Program (“BCP”) HLP Properties, LLC v. New York State Department of Environmental Conservation, — N.Y.S.2d —-, 2010 WL 455321 (1st Dept. Feb. 11, 2010) (“HLP”).
As it has argued in several cases, DEC contended that the property in question did not meet the eligibility criteria for a “brownfield” because the Site was already subject to a voluntary cleanup agreement. In a unanimous decision, the Court held that DEC had “improperly departed from statutory criteria,” noting that this result was “compelled” by its recent decision in East River Realty Co., LLC v. New York State Department of Environmental Conservation, 68 A.D.3d 564, 891 N.Y.S.2d 359 (1st Dept. 2009) (“ERRC”), which rejected such arguments by DEC. As it had held in ERRC, the First Department also held that remand to DEC for a new determination was unnecessary in light of the extensive record before it.
HLP represents the third consecutive Appellate Division decision striking down DEC’s efforts to exclude properties from the BCP based on extra-statutory factors. See also Destiny USA Dev., LLC v. New York State Department of Environmental Conservation, 63 A.D.3d 1568 (4th Dept. 2009) (“Destiny”).
The Court of Appeals will soon address related issues in a different context, having recently heard oral argument in an appeal where DEC’s exclusion of property was upheld based on DEC’s conclusion that the contaminants at issue did not exceed levels that would require remediation. Lighthouse Point Property Assocs. v. New York State Department of Environmental Conservation, 61 A.D.3d 1438 (4th Dept. 2009). HLP, ERRC, and Destiny all involved sites where the contaminant levels were significantly above DEC’s remediation standards, and where DEC conceded that remediation was necessary.
SPR represented HLP and ERRC in connection with their challenges to DEC’s exclusion of their property from the BCP. For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.
December 18, 2009
In a significant decision on eligibility of property for the New York Brownfield Cleanup Program (“BCP”), on Thursday, December 17, the First Department of the New York State Supreme Court, Appellate Division, held that the Department of Environmental Conservation (“DEC”) improperly excluded three Manhattan properties from the BCP that qualified under the Program’s definition of a “brownfield site.” In so holding, the appellate court affirmed the judgment of the lower court, which had set aside the DEC’s decision to exclude the properties. East River Realty Co., LLC v. New York State Department of Environmental Conservation, — N.Y.S.2d —-, 2009 WL 48411151 (1st Dept. Dec. 17, 2009) (“ERRC“).
DEC had argued that the property in question did not meet the eligibility criteria for a “brownfield.” Generally a brownfield is defined as property whose redevelopment or reuse of may be complicated by the presence or potential presence of a contaminant. The DEC contended that the property would have been redeveloped even without participation in the BCP, rendering it ineligible for the program. In a unanimous decision, the Court rejected DEC’s argument that a property may be deemed ineligible for participation in the BCP on the ground that the property would have been remediated regardless of such participation.
In rejecting DEC’s denial of eligibility under its application of a “but for” test, the Court cited two recent brownfield cases that similarly found DEC’s reliance on extra-statutory factors arbitrary and capricious. See Destiny USA Dev., LLC v. New York State Department of Environmental Conservation, 63 A.D.3d 1568 (4th Dept. 2009); HLP Props., LLC v. New York State Department of Environmental Conservation, 21 Misc. 3d 658 (Sup. Ct. N.Y. County 2008).
ERRC reaffirms the approach taken by the courts in Destiny and HLP, where the courts have required DEC to adhere to the eligibility criteria set forth in the BCP enabling statute, and struck down DEC eligibility decisions which seek to rely on factors outside the statute.
In addition to its reversal of DEC’s eligibility determination, the ERRC decision upheld the court below’s order that DEC accept the subject properties into the BCP. The Court agreed that given the sufficiency of evidence before the lower court, remand to the agency was not required.
SPR represented ERRC in connection with its challenge to DEC’s exclusion of the subject property from the BCP. For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.
November 12, 2009
The New York State Department of Environmental Conservation (“DEC”) has proposed four new remediation guidance and policy documents pertaining to the Brownfield Cleanup Program (“BCP”): DER-32 – Brownfield Site Cleanup Agreements; DER-10 – Technical Guidance for Site Investigation and Remediation; Commissioner Policy on Soil Cleanup Guidance; and DER-30 – Real Property Eligibility Opinions for the Brownfield Cleanup Program.
DER-32 sets forth general terms and conditions for the preparation and execution of Brownfield Site Cleanup Agreements (“BCAs”) under the BCP. The policy includes a model BCA and creates a new requirement for BCP applications, requiring applicants to include a statement acknowledging and agreeing to the general terms and conditions of DER-32.
DER-10, a 226-page document, provides technical guidance for DEC and regulated entities on how to conduct acceptable investigation and remediation for sites in the BCP, the State Superfund Program, the Environmental Restoration Program and Voluntary Cleanup Program, and for certain petroleum releases. The policy provides detailed guidance on sampling and analysis requirements, reporting requirements, site characterization, remedial investigation, remedy selection, remedial design, remedial action work plan implementation, and site management.
The Commissioner Policy on Soil Cleanup Guidance provides a uniform framework by which to select soil cleanup levels appropriate for DEC’s remedial programs. Under this policy, which will guide both DEC staff and remedial parties, the level of soil cleanup for a site will depend on the regulatory program under which the site is being addressed and the potential impact on ecological resources, groundwater, surface water, sediment and soil vapor. The selected soil cleanup level must by fully protective of public health and the environment and prevent off-site migration.
DER-30 outlines procedures and circumstances under which DEC will, upon request, issue opinions of eligibility for participation in the BCP for real property within a Brownfield Opportunity Area (“BOA”) study area or designated BOA. DEC anticipates that the issuance of an early opinion of whether a particular parcel satisfies the statutory definition of a “brownfield site,” while non-binding, will facilitate the marketing, reuse and redevelopment of such property.
DEC is accepting written comments on the proposed Commissioner Policy, DER-30 and DER-32 until December 4, 2009; written comments on proposed DER-10 will be accepted until January 4, 2010.
September 30, 2009
On Wednesday, September 29, 2009, New York City’s Office of Environmental Remediation (OER) held an informational conference call on the first set of draft regulations under the NYC Local Brownfield Cleanup Program (LBCP) and NYC Clean Property Certification Program, that were both authorized by the NYC Brownfield and Community Revitalization Act, signed into law by Mayor Bloomberg in May 2009. The LBCP and the Clean Property Certification Program are integral components of the Brownfield agenda component of the Bloomberg administration’s PlaNYC. The LBCP and Clean Property Certification draft regulations were published by OER on September 17, 2009 and will be followed in mid-November by the issuance of draft Brownfield Financial Incentive Grant regulations that will outline the city’s program for distributing $10 million in funds earmarked for support of the LBCP over three years.
The LBCP is aimed at properties that are not eligible for the New York State Brownfields Cleanup Program and that have only light to moderate contamination. Properties that the DEC have deemed “significant threat” sites, Hazardous Waste sites that DEC has classified as Class 1 and Class 2 under the NYS Environmental Conservation Law, and sites that are on the federal Superfund National Priority List (NPL) are not eligible for the city program. Cleanup criteria and citizen participation plan obligations for the City program track those of the New York State program. There are no tax credits associated with the LBCP – financial incentives under the City LBCP will be limited to grants capped at $50,000 per project. Consultants who meet the Qualified Environmental Professional criteria set forth in the draft regulations, presumptive remedies and templates for required program reports and other documentation will play an important role in the LBCP.
At present, properties that are cleaned up under the LBCP will be entitled to a release from the City for environmental conditions. During the September 29 informational call, Daniel Walsh, Director of the OER announced that discussions are underway with New York State that are expected to yield a state release for sites under the City LBCP. Walsh also announced that he hopes to obtain federal liability protection for City certified properties, but at this time no such liability protections are in place.
Two additional informational sessions will be held by the OER to discuss program procedures with consultants, property owners and other interested parties. The first of these sessions, aimed at private developers and their advisors will be held on Monday, October 5, 2009 and the second, aimed at community-based organizations, will be held on Monday, October 12.
Director Walsh strongly encouraged interested parties to comment on the program and the draft regulations. A hearing to receive comments on the draft regulations will be held on Monday, October 19, 2009 and all written comments are due by Friday, October 30.
June 9, 2009
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.
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