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Making The Project Bulletproof: A Checklist For Developers’ Attorneys

By May 5, 2016 No Comments

MAKING THE PROJECT BULLETPROOF: A CHECKLIST FOR DEVELOPERS’ ATTORNEYS
by
Craig A. Slater, Esq.

The Slater Law Firm, PLLC
500 Seneca Street, Suite 504
Buffalo, New York 14204
(716) 845-6760

I.    INTRODUCTION

To start with, the title of this presentation smacks of hubris – we all know there is no such thing as bulletproofing anything or any approvals in our business – your case or project is always subject to the vagaries of politics, policies, and a potpourri of uncertain law, fact, and judges.  So let me start by saying this is more of a checklist than a bulletproofing.  Now that qualifier works when I say it to other lawyers (who nod their heads with silent, but deep understanding), who understand we are not in the insurance business, but that qualifier doesn’t work so well with clients.  Clients hire environmental lawyers so that when they finally get approval of their project – after the slings and arrows of opponents, the changling politicians, the costs and delays, and all else that constitutes the “punishment” that is today’s development business – they want to make sure the approvals are solid.  Are unassailable.  Are legal.  Are not going to undone.  If they are not, why did I hire you, they will say.  So, here we are, the sentinel for compliance and the leader of the pack for approvals; you quiver at the thought of the multitude of potential statutes and regulations that could be sprung by your opponent; and you leap off the cliff knowing that your parachute of self-confidence, experience and knowledge will allow you to create a record that so completely supports your approval that the Court reviewing those approvals in an Article 78 proceeding will simply say “Brilliant.  Petition dismissed.”

The purpose of this article is to provide a checklist to help you get to the bulletproof project approval.  It doesn’t cover it all, but will cover the big issues and give direction on others that will enable you to get to a project that can be sustained if challenged in court.

II.    STARTING BACKWARDS:  THE ARTICLE 78 STANDARD

Any challenge to project approvals (SEQRA or action approvals) is taken under CPLR Article 78, the civil practice section governing special proceedings against State and municipal governments.  This is the exclusive vehicle for challenges (by citizens, developers, or other stakeholders) to SEQRA determinations and it is a record proceeding.  Any bulletproofing of project approvals should start with a review of how the Court will review those approvals – only when you understand and accept the principles under which the approvals will be judged, can you understand how to bulletproof them.

CPLR §7803 specifies that three questions may be raised in an Article 78 proceeding:  (1) whether the agency fails to perform a duty enjoined upon it by law; (2) whether the agency is proceeding without jurisdiction; or (3) whether the determination was made in violation of lawful procedure, affected by an error in law, or was arbitrary or capricious.  An additional question on whether the decision is supported by substantial evidence can also be raised where a mandatory, adjudicatory hearing has occurred.  The arbitrary and capricious standard is the standard governing most municipal determinations and, clearly, is the most critical.

The Court of Appeals has held that “[j]udicial review of a lead agency’s SEQRA determination is limited to whether the determination was made in accordance with lawful procedure and whether, substantively, the determination was ‘affected by an error of law or was arbitrary and capricious or an abuse of discretion’ .”  Akpan v. Koch, 75 N.Y.2d 561, 570, 555 N.Y.S.2d 16, 20 (1990), remittitur denied, 76 N.Y.2d 846 (1990) (citations omitted).  It has been said that the arbitrary and capricious standard simply requires the court to determine if the decision “has a sound basis” and has a “foundation in fact”.  Pell v. Board of Ed., 34 N.Y.2d 222 (1974).  It must have a “rational” basis.  Id.  In short, it is probably the broadest standard of review available.

New York courts defer to the agency’s experience in determining the adequacy of SEQRA review, whether the lead agency is DEC, (Matter of Concerned Citizens Against Crossgates v. Flacke, 89 A.D.2d 759, 453 N.Y.S.2d 939 (3d Dept., 1982), aff’d, 58 N.Y.2d 919, 460 N.Y.S.2d 531, 447 N.E.2d 80 (1983)), or a town board, Webster Associates v. Town of Webster, 85 A.D.2d 882, 446 N.Y.S.2d 955 (4th Dept., 1981), rev’d on other grds, 59 N.Y.2d 220, 464 N.Y.S.2d 431 (1983).
Courts may not substitute their own judgment for the lawfully exercised discretion of the lead agency.  H.O.M.E.S, supra; Jackson v. NYSUDC, 503 N.Y.S.2d 298 (1986); and Aldrich v. Pattison, supra.

III.     STARTING AT THE BEGINNING: IDENTIFYING ALL OF YOUR AGENCY APPROVALS.
A very important part of the approval for any project is to make sure you know exactly what approvals you need from whom.  That goes without saying, but sometimes it is not so easy.  This exercise, however, is essential to your SEQRA review and your project approval and will be critical to defense of any challenge to your action.
Early consideration of whether the following approvals are required should be undertaken:
DEC regulatory permits (air, wetlands, water quality, dam/stream, etc.).
Federal regulatory permits (wetlands).
NYS Coastal Zone
NYS State Historic Preservation.
NYS DOT.
County GML approvals.
Flood plains, critical habitat, historic buildings, archaeology, and other unique site-specific issues.

IV.     STARTING AT THE BEGINNING: IDENTIFYING ALL OF YOUR MUNICIPALITY APPROVALS.
Again, identifying each municipal approval required (site plan, zoning, variances, use permits, etc.) and the entities in the municipality responsible for those approvals (Town Board, ZBA, Planning Board, or Building Inspector) is key.  Do it early in the process, get the municipality’s buy in, and paper your trail.

V.    SEQRA
While the provisions of SEQRA will be discussed elsewhere in this seminar, it is the touchstone for project approval and potentially the heaviest lifting.

    A.  Strict and Literal Compliance Required
Strict compliance with both the letter and spirit of SEQRA is mandated.  Sole v. Town of Colonie, 95 A.D.2d 979 (3d Dept., 1983).  Literal compliance with the environmental review procedures set out in SEQRA and the regulations is required since the legislature has directed that the policies, statutes, and ordinances of the State be interpreted and administered to the fullest extent possible in accordance with SEQRA.  Aldrich v. Pattison, 107 A.D.2d 258 (2d Dept., 1985).    A failure to adhere to the literal requirements of SEQRA is contrary to the extensive environmental review procedures set out in SEQRA and the spirit of SEQRA itself.  Rye Town/King Civic Association v. Town of Rye, 82 A.D.2d 474, appeal dismissed, 56 N.Y.2d 508 (1982).

B. Literal Compliance is Required.
The Fourth Department has held that sometimes less than literal compliance will do.  In Golden Triangle Associates v. Town Bd. of Town of Amherst, 185 A.D.2d 617, 585 N.Y.S.2d 895 (4th Dept., 1992), a town board rezoned a parcel first and then issued a negative declaration, reversing the proper procedure.  The court held the board’s subsequent approval of the rezoning cured the procedural error.

C. There is Low Threshold for Triggering a Positive Declaration
The threshold as to whether a Type I or Unlisted action requires an environmental impact statement is a low one.  Kirk-Astor Drive Neighborhood Association v. Town Board of the Town of Pittsford, 106 A.D.2d 868 (4th Dept., 1984), appeal dismissed, 66 N.Y.2d 896 (1985).  Courts have insisted that SEQRA is broad in its terms and that it mandates an EIS for any action agencies propose or approve which may have a significant adverse effect on the environment.  In New York courts this standard is considered as a “low threshold.”  Onondaga Landfill Systems, Inc. v. Flacke, 81 A.D.2d 1022, 440 N.Y.S.2d 788 (4th Dept., 1981).

D. Conditional Negative Declarations
An agency may not condition a negative declaration on the applicant taking measures to mitigate the impacts of a Type 1 Action.  Shawangunk Mountain Environmental Association v. Planning Board of Town of Gardner, 157 A.D.2d 273 (3d Dept., 1990); Miller v. City of Lockport, 210 A.D.2d 955 (4th Dept., 1994), leave to appeal denied, 85 N.Y.2d 807 (1995).

The Court of Appeals has provided important guidance on this issue and the use of CND’s which should be note.  In Merson v. McNally, 665 NYS2d 605 (1997), the Court upheld the issuance of a negative declaration for a large mining project and overturned the Appellate Department’s finding that the negative declaration was illegally “conditional”.  The Court found that the project modification and mitigation measures proposed by an applicant to address potential environmental impacts are not an illegal CND so long as the modification evolved from the “give and take” of “an open and deliberative process.”

The holding in Merson was relied upon by the Third Department in Wilkinson v. Planning Board of the Town of Thompson, 680 NYS2d 710 (3rd Dept., 1998) in upholding a negative declaration for a 200,000 square foot Wal-Mart Supercenter.

E. “Hard Look” Standard
SEQRA requires that a lead agency demonstrate that it made a thorough investigation of the environmental effects associated with the project, identified relevant areas of environmental concern, took the required “hard look” at those concerns and made a reasonable elaboration of the basis for its findings.  H.O.M.E.S. v. NYSUDC, 69 A.D.2d 222 (4th Dept., 1979).

F. Not Every Impact must be Reviewed
SEQRA does not require the lead agency to identify and address every conceivable environmental impact, mitigating measure, or alternative of a project to satisfy the substantive requirements of SEQRA, only those reasonably related to the project or potential environmental impacts.  Id and Akpan v. Koch, 152 A.D.2d 113 (1st Dept. 1989), aff’d, 75 N.Y.2d 561 (1990).

G. Lead Agency need not Reach a Specific Result
SEQRA does not require that the municipality reach a particular result on any issue nor does it permit a court to second-guess the town’s decision; SEQRA does not give courts the ultimate authority to approve or disapprove a properly authorized project where an adequate environmental review has been conducted in accordance with SEQRA requirements.  Jackson v. UDC, supra.  As stated by the Court of Appeals in Jackson “… it is not the role of the courts to weigh the desirability of any action or choose among alternatives, but to assure that the agency itself has satisfied SEQR, procedurally and substantively.”  Id.; ECL §8-0109(8); see also Matter of Neville v. Koch, 79 N.Y.2d 416, 424-25 (1992); Congdon v. Washington County, 134 Misc. 2d 765, 774 (Sup. Ct., Washington County 1986), aff’d, 130 A.D.2d 27 (3rd Dept. 1987), appeal denied, 70 N.Y.2d 610 (1987).

H. Killer Remedies
The Court of Appeals has repeatedly held that if an agency decision is made in violation of SEQRA, it should be annulled.  When a violation of SEQRA has been found, all actions taken on reliance upon a defective SEQRA review process are simply undone by court order.  See, for example, Parkview Associates v. City of New York, 71 N.Y.2d 274, cert. denied and app. dism., 488 U.S. 801 (1988); EFS Ventures Corp. v. Foster, 71 N.Y.2d 359 (1988); Parkview Associates v. City of New York, 71 N.Y.2d 274 (1988); Modern Landfill v. Jorling, 116 A.D.2d 1112 (4th Dept.), lv. to app. denied, 76 N.Y.2d 715 (1990).

In the Parkview case, a developer was required to shave the top floors of a building that had been built that exceeded height limits.  Scary.

In EFS Ventures Corp., the Court of Appeals reviewed the decision of the Lower Court that held that the builder “proceeded at its own peril by completing construction in the midst of unresolved litigation” and confirmed the agency’s directive that the motel units built during the pendency of the lawsuit be demolished.  The Court of Appeals, nevertheless, held that the Board acted arbitrarily when an order and demolition of the structures because the challenge to the structures was then time-barred from judicial review.

In the Modern Landfill case, the Fourth Department ordered the removal of over 30 feet of garbage that had been disposed of under in reliance upon a properly issued DEC permit because DEC had failed to comply with SEQRA in reviewing the permit application.

In Tri-County case, the Court of Appeals ordered a new election after a town ignored SEQRA during its approval process.

I. Your Job as SEQRA Attorney
• Follow procedure under SEQRA.
• Follow publication and notice requirements.
• Make sure procedure for solicitation and designation of lead agency is correct.
• Categorize your action early and modify project to avoid Type I action if you can.
• EAF Part 2 is the responsibility of the lead agency.
• Make your paper trail on SEQRA compliance.
• Work with your lead agency on “making your record”.
• Prepare your Determination of Significance or Findings Statement for the lead agency.
• Bigger is Better for record purposes.

VI.    ZONING APPROVALS

Bulletproofing zoning approvals is again a function of understanding what your burden of is, how you can sustain it, and how the Court will review it.  Review the requirements and create your record.
A. Site Plan Approvals.
• Governed by Town Law §274-a
• Shows arrangement, layout and design of the proposed land use.
• Public hearing may be required.
• Notice to County Planning may be required.
B. Special Use Permits
• Governed by Town Law §274-b.
• Requirements for a special use permit are set out in the zoning code.
• Public hearing may be required.
• Notice to County Planning may be required.
• Must show
C. Use Variances
• Governed by Town Law §267-b(2)
• ZBA jurisdiction.
• Must show unnecessary hardship (real dollars).
D. Area Variances
• Governed by Town law §267-b(3)
• ZBA jurisdiction
• Must show (1) that an undesirable change will to be produced in the character of the neighborhood or be a detriment to nearby properties; (2) benefit sought cannot be achieved by some other feasible method; (3) the variance is not substantial; (4) the variance will not adversely effect the physical or environmental conditions of the neighborhood; and (5) the hardship difficulty was not self-created.

VII.    GENERAL MUNICIPAL LAW

General Municipal Law §239-m can be a roadblock to approval and a green light for successful litigation challenge if not followed.  Read it and apply it.

GML §239-m requires that certain zoning actions must be referred to the County Planning Board for a report and recommendation for approvals related to projects located within 500 feet of:
• The boundary of a municipality.
• The boundary of a county or state park.
• The right of way for a county or state road.
• The boundary of any county or state owned land on which a public building is situation.
• The boundary of a farm operation in an agricultural district.

This section applies to any of the following approvals:
• Adoption or amendment of the zoning law.
• Special use permits.
• Use or area variances.
• Site plan approvals.
• Subdivision approvals.

VIII. STATE AGRICULTURAL DISTRICT
• Impact of location of site on agricultural district
• Tax Issues:  If you are converting land in an Agricultural District that received agricultural assessment, a payment of 5 times the taxes saved in the last year, p.lus 6% must be paid for up to five years.  Ag and Markets Law §305(1)(d).
• Requires Notice of Intent process.  §305(4).
• Limitations on use of water and sewer lines (§305(4)) and use of public funds for ED.

IX. WETLANDS
While wetlands and wetlands permitting will also be discussed in a different segment of this seminar, because of its importance, special mention should be made of this area of law.

A.  Initial Considerations

• Is the area a “wetland”?
• Is the wetland within State or Federal jurisdiction?
• Is the activity regulated?
• Could the activity be exempt?

B.    Federal Wetlands

• Clean Water Act §404 (33 U.S.C. §1344)
• 33 CFR Parts 320-330
• Prohibitory Program
• Geographic Jurisdiction:  Federal jurisdiction over wetlands under the CWA is limited to the “waters of the United States”.  CWA §404.  By regulation, this includes wetlands, wetlands adjacent to waters of the U.S., and wetlands the degradation of which could affect interstate commerce or U.S. waters.  33 CFR §328.3(a).  Also see discussion below on the SWANNC case and progeny.
• Delineation: Soil, Hydrology, and Vegetation.  1987 Corps of Engineers Wetlands Delineation Manual and 33 CFR §328.3(b).
• There is no buffer for federal wetlands.
• Exemptions:  normal farming, farming roads, ditch and bridge maintenance.
• Nationwide Permits:  Nationwide permits are governed by 33 CFR Part 330 regulations, but are published, not codified, are deemed “permits by rule”, and are activity-based.  If the activity will be considered to have “minimal adverse environmental impacts”, such less than 1/10 acre (down from 1 acre) in size, boat ramps, navigation aids, utility lines, surveying, small bank stabilization, etc.  CWA §404(e)(1).
• Individual Permits:  must meet all regulatory requirements of 33 CFR Part 320 and 40 CFR Part 230; must submit the wetland delineation; must justify project purposes and need; and must identify all environmental impacts.  There is a notice and public comment period; NEPA applices; and EPA and USFW must comment.  NYSDEC water certification shall be necessary even if no state wetlands are present.
• General Policies Governing Permit Review:  Public interest (benefits balanced against detriments), public or private need, and practicable alternatives tests (33 CFR §320.4(a)) and AMC.  See, USEPA and USACOE Memorandum to the Field on Alternatives Analysis, November 11, 2004.
• Avoidance first, then Minimization, and only then Compensation (33 CFR 320.4(r)).
• EPA Veto:  CWA §404(c) grants to EPA the authority to veto any Corps permit where it can be shown that the grant of permit would cause an “unacceptable adverse effect” on municipal water, shellfish or fisheries, wildlife, or recreation areas.  Procedures related to the EPA veto are set out in 40 CFR Part 231.

C. State Wetlands

• Environmental Conservation Law Article 24
• 6 NYCRR Parts 663 and 664.
• Prohibitory Program.
• Must be 12.4 acres or larger (ECL §24-0107(1) and 6 NYCRR §663.2(p)), unless…
• Unless the Commissioner decides that the wetlands are of “unusual local importance” (ECL §24-00301(1)).  ECL §24-0105(7) is referenced for the “unusual local importance” criteria that includes, among other things, whether the wetlands is a habitat for endangered or threatened species, provides flood and storm control, is a breeding ground for wildlife, is a recreation area, etc.  The same notice mapping provisions apply.
Unless a municipality has enacted their own local laws to regulate wetlands.  ECL §24-0501.
• Delineation:  Vegetation only under ECL §24-0107(1), but DEC’s Freshwater Wetlands Delineation Manual, July 1995, applies soil, hydrology, and vegetation factors.
• 100 foot buffer (“adjacent areas”)
• Exemptions:  Same as federal.
• Classification of Wetlands:  Class I, which provide the most wetlands benefits, to Class IV, which provide the fewest benefits.
• Permit Criteria: Compatibility (3 tests – compatible with preservation, compatible with public health, and would result in no more than insubstantial degradation or loss of wetlands) and then weighing standards (benefits balanced against detriments – “clearly outweighs”, pressing economic or social need, practicable alternatives test, and avoidance and mitigation.  6 NYCRR §663.
• Avoidance first, then Minimization, and only then Compensation.

D. Recommendations

1. Delineation

• Delineate Early
• The Use of Informal Delineations.
• Fighting the Technical Battle and Managing the Delineation Report

2. Growing into technical jurisdiction

• Your Delineation is only good for 5 years.
• Your permit has a limited life.
• You can grow into jurisdiction.

3. Filing your delineation or application too early.

Upon filing, you lose a lot of flexibility in managing site and project details.

4.Avoid and Minimize

Asking to put 150 sardines in a 100-sardine box, while tempting, is not reasonable, will not advance the permit ball, and is, frankly, a waste of time and money.  While you must show palpable efforts at finding other locations for the project that do not have wetlands and efforts at trying to move your project around on the site to avoid wetlands in order to fulfill the “practicable alternatives” test, it is a waste of design money and project time to ask for the impossible.  Presume the agencies want total avoidance.  At least between client and lawyer, you need to have an idea early on about what kind of “hit” the project can take (number of acres, number of units, wetlands compensation packages, etc.) and still be financially possible.  That is not to say you should not proceed aggressively to get what you need, but act reasonably with thorough back up and support.

5.    Getting local and community support

Local municipal and/or community support means more to the Federal and State government than you think.  This type of support makes a compelling public needs argument and works in other ways.

6. Know your compensation numbers

Well, what I mean by this, is that you need to know the Federal and State Mitigation Compensation Policies, use them as a check-off box to support your request, know your compensation ratios, and your costs.

Remember, DEC policy now is that you cannot “impose” a buffer upon a neighbor to create, mitigation wetlands.  For some, that will limit the availability of on-site and off-site mitigation.

7. Pre-Application Scoping Meetings

Once you have front-loaded the science and the project and you are ready to get going, pre-application meetings, prior to filing, with the local municipality and the federal and state agencies is, in almost all cases, necessary, beneficial, and productive.  You may not like State and Federal policies on wetlands, but pre-application meetings are encouraged by State and Federal policy and you should avail yourself of them.  You can informally layout your project and get vital feedback on your proposals.  In many cases, the agencies will be quite specific on exactly what they may or may not find acceptable.

BUT, LISTEN during your meeting.  A pre-application meeting is certainly a time to “advocate” your project, but it is also the time to listen to the regulators.  Try to respond.  Try to make the changes you can.  Try to explain why you cannot do certain things and then provide your support and analysis.  Discuss their concerns, consider them, consider if you can accommodate them, and if you can’t, make your argument/case in support of your application.

8. Front Load Wetland Issues.

I have already said this, but wetlands are a good deal stopper for agencies and opposition.  View it that way.  It is not just a caution sign; it’s a potential stop sign.  It is also a huge cost and time delay driver.  Front load the issues now.  Don’t spend a lot of money on the project, file your applications, and think that somehow the wetlands will just go away.  You will be setting yourself up to be very mad and frustrated and your project will end up in jeopardy.

9. Avoid and Minimize

Yes, I know, I have already discussed this, but it is important enough to mention twice.  Get a wetlands specialist now and front load your wetlands analysis and alternatives.  Sit down with your project engineer now.  Spin your project around, think like a regulator, and try to make the project happen without impacting wetlands.  Show your homework!  Get a real estate agent now.  Make sure your paper trail on practicable alternatives is complete.

X. GENERAL STORMWATER PERMIT

• DEC General Permit for Construction Activities.
• New GP-0201 (effective March 10, 2003) covers any project disturbing more than 1 acre.
• SWPPP is a prerequisite.
• Quality and quantity measures required.
• Up to 60 business days notice to DEC.
• If the SWPP varies from DEC technical guidance, SWPP must be certified by license professional.
• Notice of Termination must identify permanent structures, certify as built, and certify O&M plan in place.

XI. STATE HISTORIC PRESERVATION OFFICE

• State – OPRHP §14.09
• Federal – NHPA §106
• SHPO is “interested” agency, not involved.
• Remember it covers buildings, structures, monuments, and archaeology.
• Will be a SEQRA issue.