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Update on Brownfields Program Eligibility: The First Department Upholds the Supreme Court's Rejection of DEC's Use of a "But-For" Test

Late last year, the First Department, in the Matter of East River Realty v. N.Y. State Department of Environmental Conservation, 2009 NY Slip Op 9381, 68 A.D.3d 564 (N.Y. App. Div., 1st Dep't Dec. 17, 2009), upheld a Supreme Court ruling that the New York State Department of Environmental Conservation ("NYSDEC") cannot use a "but-for" test in determining eligibility into its Brownfield program. We reported on the Supreme Court's decision in a prior post, and refer you there for a recitation of the relevant facts and reasoning of the Supreme Court. 

The properties involved here are three blocks on the east side of Manhattan, one a former coal gasification plant, another a former electric generating facility and the last a former fuel terminal. The dispute between the applicant (East River) and NYSDEC stems from NYSDEC's decision to not allow these three properties into the Brownfield Cleanup Program after determining that they do not meet the definition of "Brownfield site". The definition of "Brownfield Site" is "any real property, the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant." ECL ยง 1405(2).

The NYSDEC argued that since the site was going to be redeveloped regardless of whether the owners received the tax benefits under the program, the redevelopment was not "complicated" by the presence of contamination. The Supreme Court disagreed, stating that the NYSDEC's reasoning was an improper "but-for" test not mandated by the statute. The NYSDEC appealed.

In a short decision setting forth absolutely no reasoning, the First Department said that there was sufficient evidence for the Supreme Court to determine that East River was eligible for inclusion into the Brownfield Cleanup Program. Our guess is that, the Court viewed this case akin to the DestiNY case (2008 Slip Op. 51161 (N.Y. Sup.Ct. Onondaga Cty. 2008)), in which the Supreme Court overruled DEC's "not eligible" determination because the site was a heavily polluted former industrial site, subject to significant monitoring and oversight by DEC during the redevelopment much like the site as issue here.

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