A state appeals court overturned a lower court decision and ruled that the New York State Department of Environmental Conservation (NYSDEC) had improperly denied a Brownfield Cleanup Program (BCP) application. In the Matter of Wythe Berry, LLC v. New York State Department of Environmental Conservation, 2020 N.Y. App. Div. LEXIS 7234 (App. Div.-2nd Dept. 11/25/2020).
In 2014, the petitioner/plaintiff acquired title to a site that was subject to a multi-site Order on Consent and Administrative Settlement that had been entered into by a predecessor of National Grid. The NYSDEC denied the petitioner’s BCP application on two grounds. First, the NYSDEC determined that the Site was ineligible for participation in the BCP because the existence of the consent order meant the site was subject of an ongoing state enforcement action. This was consistent with long-standing policy of the NYSDEC that former manufactured gas plant (MGP) sites that are subject to multi-site orders on consent with several utilities fall within the “enforcement action” exclusion.
Second, the agency concluded that it would not be in “the public interest to accept the site into the BCP on the grounds that National Grid was prepared complete the remediation and acceptance would have required the taxpayers to incur unnecessary financial obligations.
The petitioner filed an article 78 proceeding challenging the denial of the application. Around the same time, NYSDEC approved an Interim Site Management Plan (ISMP) prepared by National Grid which established protocols for managing excavated soil. The petitioner went ahead with its development project and implemented the ISMP. In September 2014, NYSDEC notified National Grid that that the petitioner had excavated the bulk of the contaminated and that no further work was required.
In October 2015, the trial court denied the article 78 petition. The court did not address the first grounds of the denial that the NG order was an enforcement action but deferred to DEC’s conclusion that the public interest would not be served by accepting the application. We discussed the lower court opinion in more detail in our prior post.
On appeal, the court began its analysis by stating that it did not have to defer to NYSDEC’s interpretation because the dispute was one of pure statutory reading and analysis of legislative intent. On the “public interest” exclusion of ECL § 27-1407(9), the court said that based on the plain language of the statute and the legislative history, the possibility that a site could result in an unnecessary” financial burden to the state should not have been a consideration in NYSDEC’s determination on the application. The court explained that:
“any “financial misgivings” concerning the fiscal impact of a property being accepted into the BCP on the state is irrelevant to the question of whether the public interest would be served by the granting of an application to participate in the BCP. The DEC is not tasked with acting as “a fiscal watchdog “
Turning to the “enforcement action” exclusion of ECL 27-1405(2)(e), the court there was no support in the language of the statute or in its legislative history for the DEC’s conclusion that the consent order constituted an ongoing enforcement action within the meaning of ECL 27-1405(2)(e). The court said the consent order, by its terms, was a voluntary agreement and did not contain any admission or finding of liability nor allegation of any violation of any law, regulation, permit, order, requirement, or standard of care of any kind.
Finally, the court rejected NYSDEC’s argument that matter was rendered moot because the cleanup was completed since the relief sought by petitioners was to rule the site was eligible for the BCP retroactive to the denial date and this would have made them eligible for tax credits. However, because the record was not sufficiently developed on the issue of if petitioner’s remedial activities pursuant to the ISMP satisfied the requirements set forth in the BCP