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New York's Highest Court Overturns a DEC Brownfield Cleanup Program Eligibility Determination - Part II.

Continuing with our prior post, this post discusses the Court of Appeal's ruling in In the Matter of Lighthouse Pointe Property Associates, LLC v. New York State Department of Environmental Conservation, 2010 NY Slip Op 1377, 2010 N.Y. LEXIS 35, (Ct. App. Feb. 18, 2010), and the implications of that decision. 

Court of Appeals' Decision

First, the Court struck down the Appellate Division's ruling that the DEC is to be given deference in interpreting the Brownfield Cleanup Act. The Court reasoned that, when the question is of pure statutory reading, as it is in the definition of "brownfield site", there is little basis to rely on an agency's interpretation. The Court interpreted the definition to have a low eligibility threshold and noted that its interpretation is consistent with the statute's legislative history. That is, because the government is able to impose joint and several liability to recover the costs to clean up contaminated properties from the owners of those properties, even minimally polluted properties were rendered unmarketable and lenders unwilling to finance redevelopment. In passing the BCA, the Legislature sought to alleviate these economic and environmental problems.

The Court then held that there was enough evidence in the record for the Supreme Court to reasonably determine that the Lighthouse Pointe ("Lighthouse") Sites should be allowed into the BCP.

The most compelling fact, the Court found, is that DEC previously refused to allow Lighthouse to redevelop the area of the Inland Site that was home to the city landfill, and then subsequently refused to allow the Sites into the BCP. The Court noted that, if the DEC had initially provided Lighthouse with a release of liability, then the Court might have reached a different conclusion. But, since DEC cannot grant a release of liability without Lighthouse's completion of a cleanup under DEC oversight, then there is no way that these Sites would ever be able to be redeveloped.

Implications

This decision may not broaden eligibility as much as it initially appears, because the facts presented were so favorable for inclusion into the BCP. In other words, there was really no issue as to whether the on-site contamination complicated the site redevelopment. There were exceedences of DEC's own SCOs at all sampling points, and because of these exceedences the developer was not able to obtain financing or the requisite permits. So, it is easy to conclude that the Sites here are eligible. In future cases, the DEC may try to distinguish the facts of this case from other sites to which they deny Program entry.

Nonetheless, the implications of this case may be far reaching as concerns the part of the Court's decision that held that DEC was not entitled to deference in determining whether a site was allowed entry into a program that it administers. Our prior post discussing the trial court's ruling in this case noted that, up until that decision, most, if not all, courts summarily deferred to DEC's administration of the BCP.

One commenter has suggested that, since the DEC is not an economic development agency and that a large part of the BCP has to do with development tax credits, DEC should not be entitled to deference.

Future courts may look to this decision, the only Court of Appeals one on this issue, as charging courts to not rely on the DEC reasoning, but to look at the eligibility requirements and the individual facts of the case and make its own determination. In order to avoid having courts decide eligibility into the BCP, rather than the agency, the DEC may start allowing more sites into the Program, especially those with facts that tip more in favor of eligibility.

Finally, we note a certain irony in the timing of this decision: it comes at a time when the DEC is not shy about kicking sites out of the program for failing to timely act under the terms of the individual site Agreement. So, whether this decision really does impact DEC's decision-making process - and ultimately the number of sites in the Program - remains to be seen.

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