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628 Land Associates - Ruling, December 21, 1993

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of
an Application filed pursuant to ECL Article 24 and 6 NYCRR Part 663
for a permit to construct a retail shopping center in and adjacent to Freshwater Wetland AR-5

- by -

628 LAND ASSOCIATES
c/o Omnia Properties
20 Exchange Place
New York, New York 10005

APPLICANT

RULING ON APPLICANT'S MOTION TO DISMISS

DEC APPLICATION No.

2-6406-00273/00001-0

SUMMARY

After requesting a public hearing on the captioned permit application, the Applicant moved to dismiss the subject proceeding for lack of jurisdiction. As an alternative, the Applicant requested that the hearing be scheduled immediately and limited to whether the Department properly denied the permit. The Department Staff opposed the Applicant's motion.

In denying the Applicant's motion, this ruling finds: (1) the Applicant has not exhausted its administrative remedies, and (2) that while the Uniform Procedures Act (ECL Article 70) requires the Department to continue processing the application, the provisions of the State Environmental Quality Review Act (ECL Article 8) must be met.

Since the Department did not make the required SEQR determination until after referring this matter to hearing, the Applicant may explain how the Staff's SEQR determination is defective, and provide information to rebut the factual basis for the Staff's determination.

PROCEEDINGS

On January 13, 1993, the Applicant submitted an application for a freshwater wetland permit to construct a retail shopping center (the Project) in and adjacent to Freshwater Wetland AR-5, a Class I wetland. The Project is located on Woodrow Road on Staten Island (Richmond County).

By certified letter dated June 2, 1993, the Applicant requested a determination about the Project as provided by ECL 70-0109(3)(b) and 6 NYCRR 621.9(b). In a letter dated June 11, 1993, the Department's Chief Permit Administrator, denied the captioned permit application. The Applicant requested a hearing and, the Region 2 Department Staff (the Staff) referred the matter to the Office of Hearings on July 27, 1993.

After reviewing the application materials, I determined the Staff had not made a determination about the proposed Project as required by ECL Article 8 (SEQR). My letter dated August 2, 1993 directed the Staff to provide a SEQR determination to prepare the Notice of Public Hearing. On September 21, 1993 the Staff issued a Positive Declaration which requires the Applicant to prepare a Draft Environmental Impact Statement (DEIS).

With a cover letter dated September 29, 1993, the Applicant filed a Motion for Dismissal of Proceedings or Alternative Relief with a supporting affidavit and Memorandum of Law. With a cover letter dated November 9, 1993, the Region 2 Department Staff filed a Memorandum of Law opposing the Applicant's motion. On November 12, 1993, the Applicant filed a reply.

THE APPLICANT'S MOTION FOR DISMISSAL OR ALTERNATE RELIEF

The Applicant claimed the Department lacks jurisdiction over the Project and moved to dismiss the pending hearing. According to the Applicant, the Chief Permit Administrator's letter dated June 11, 1993 denying the requested permit is the Department's final decision pursuant to ECL 70-0109(3)(b) and 6 NYCRR 621.9(b). The Applicant argued it would contravene the intent of the Uniform Procedures Act [ECL Article 70 (UPA)] to proceed with a hearing because the Chief Permit Administrator, as the Commissioner's designee, already denied the requested permit.

The Applicant asserted that if the response from the Chief Permit Administrator is not the Department's final decision on the requested permit, then the Department Staff did not act on the Applicant's demand for a final determination within the required five business days. Consequently, the Applicant argued the Department Staff should issue a permit with standard conditions as provided by ECL 70-0109(3)(b).

The Applicant also contended the procedural mandates of ECL Article 70 (UPA) supersede the substantive requirements in ECL Article 8 (SEQR) thereby preventing the Department from demanding a DEIS. The Applicant argued the hearing should be scheduled immediately, and the scope of the hearing should be limited exclusively to whether the Department Staff properly denied the permit.

THE DEPARTMENT STAFF'S RESPONSE

The Department Staff argued the Chief Permit Administrator's response to a request for a determination made pursuant to ECL 70-0109(3)(b) and 6 NYCRR 621.9(b) is not the Department's final decision on an application. The Staff contended the Chief Permit Administrator is not the Commissioner, but a member of the Department Staff. The Department Staff concluded the Chief Permit Administrator's response is subject to review by the Commissioner after a hearing.

The Department Staff argued that if the Department issued a permit without complying with SEQR first, then the permit would be invalid. According to the Staff, it would be reversible error to hold a permit hearing before making the required SEQR determination and findings. The Staff argued the legislative history of UPA does not explicitly state or suggest that the Legislature intended to limit the substantive requirements of SEQR by UPA. The Department Staff concluded that the procedural mandates of UPA do not limit the substantive requirements of SEQR.

The Department Staff requested that the Applicant's motion be dismissed in its entirety.

DISCUSSION OF LEGAL ISSUES

The Applicant's motion raises two legal questions. The first question is whether the Applicant has exhausted its administrative remedies. The second question is whether the procedural mandates of ECL Article 70 (UPA) supersede the substantive requirements in ECL Article 8 (SEQR).

I. Exhausting Administrative Remedies

The Applicant's claim that the Department lacks jurisdiction over the Project because the Chief Permit Administrator denied the permit is erroneous. The principal question is whether the Applicant has exhausted its administrative remedies.

Section 621.7(f) explicitly provides an applicant with the right to a hearing when, as here, there has been no adjudicatory hearing and the Department has denied a permit. Section 621.7(f) applies to all permit denials by the Department Staff regardless of whether the denial arose from a 5-day letter by the Chief Permit Administrator. Since no hearing has been held, the Applicant has not exhausted its administrative remedies.

II. UPA v. SEQR

The procedural mandates of ECL Article 70 (UPA) do not supersede the substantive requirements in ECL Article 8 (SEQR). Though the Applicant correctly pointed out that the Department's duties under UPA are mandatory rather than directory [Seaboard Contracting and Material, Inc. v. Department of Environmental Conservation 132 AD2d 105, 522 NYS2d 679 (3d Dept 1987], the Applicant ignored two significant factors. First, the Applicant disregarded the Department's mandate to consider environmental effects when undertaking or approving actions [ECL 8-0103(8) and (9), and 8-0109(8)]. Second, the Applicant overlooked how UPA has insured that the Department continued to process the application.

The Applicant disregarded the Department's mandate to comply with the provisions of ECL Article 8 before authorizing an action that may affect the environment. However, literal compliance with SEQR is required [Rye Town/King Civic Association v. Town of Rye 82 AD2d 474, 480 (2d Dept. 1981), app dism 55 NY2d 747].

Once a violation of SEQR is shown, the courts have held that the proper remedy is to annul any determination that does not fully comply with SEQR [EFS Ventures v. Foster 71 NY2d 359, 371 (1988); Tri-County Taxpayers Association, Inc. v. Town Board of the Town of Queensbury 55 NY2d 41, 43 (1982); Chinese Staff and Workers Assn, v. City of New York 68 NY2d 359, 369 (1986); Devitt v. Heimbach 89 AD2d 920 (2d Dept. 1982), affd 58 NY2d 925]. Furthermore, the Commissioner may revoke a permit if the SEQR determination is defective [Modern Landfill Inc. v. Jorling 161 AD2d 1112, 555 NYS2d 937 (4th Dept 1990)].

The Applicant overlooked how UPA has insured that the Department continued to process the application. UPA contains two default provisions to insure that the Department reviews permit applications in a timely manner. First, the application is deemed complete if the Department Staff does not notify an applicant that its permit application is incomplete within 15 days after the Department Staff receives the application [ECL 70-0109(1)(b)]. The subject application was deemed complete as provided by the first default provision.

The second default provision applies when the Staff does not make a decision about a permit application within 5 days after an applicant requests a decision [ECL 70-0109(3)(b) and 6 NYCRR 621.9(b)]. With respect to the subject application, the Department Staff promptly responded tothe Applicant's request for a decision.

An additional default provision applies to the Commissioner's decision when a matter is referred to hearing. Section 624.15(a) requires the Commissioner to issue a final decision within 60 days after the close of the hearing record. If the Commissioner does not make a final decision within the prescribed limit, then the provisions of 621.9 apply.

The only remaining UPA time limit that could apply to this permit application is the one provided by 624.15(a). However, the record of the hearing is not closed. Therefore, the Applicant cannot invoke this provision yet.

The Applicant cannot rely on Heimbach v. Williams [136 Misc2d 1, 517 NYS2d 393 (Sup Ct Albany Cty 1987)] and Atlantic Cement Co., Inc. v. Williams [129 AD2d 84, 516 NYS2d 523 (3d Dept 1987)] to support the position that the procedural mandates of UPA supersede the substantive requirements in SEQR. The case law cited by the Applicant does not address the question of whether the procedural mandates of ECL Article 70 (UPA) supersede the substantive requirements in ECL Article 8 (SEQR).

The principal question in Heimbach was whether Orange County's landfill application was complete pursuant to UPA after the County had provided the Department with a DEIS. The court found that because the Department did not meet the first UPA time limit, the application was complete by default. Accordingly, the court directed the Department to continue processing the County's landfill application After Orange County's landfill application went to hearing, the Commissioner denied the application because the record lacked the information necessary to conclude there were no reasonable alternatives to the County's proposal (Orange County Department of Public Works, Decision dated July 20, 1988, DEC No. 3-3330-37-3).. In this instance, however, there is no dispute that the subject application is complete by default.

In Atlantic Cement the court ruled the Draft EIS requested by the Department Staff was not the kind of "supplemental information" authorized by ECL 70-0105(2) and 70-0117(2). Unlike this application, Atlantic Cement involved a renewal permit which the court held was grandfathered from SEQR. Since the subject application is for a new permit, additional information in the form of a DEIS can be required. Furthermore, the Commissioner has determined that requesting supplemental information in the form of a DEIS does not affect the completeness of the application [Owl Energy Resources, Inc. Interim Decision dated February 26, 1993, DEC No. 2-6401-00073-00001-0].

The Applicant's references to the National Environmental Policy Act (NEPA), SEQR's federal analogue, and federal case law [Flint Ridge Development Company v. Scenic Rivers Association of Oklahoma 426 US 776, 96 SCt 2430, 49 LEd2d 305 (1976)] are misplaced. The applicable statute in this instance is ECL Article 8, not NEPA. Moreover, the federal case law cited by the Applicant does not address the mandate from New York's Courts to follow SEQR literally.

Since literal compliance with SEQR is required and the Applicant would be able to supply additional information without affecting the completeness of the application, the potentially significant environmental impacts of the Project can be evaluated as required by SEQR while the application continues to be reviewed pursuant to UPA.

RULINGS

I. The Applicant's Motion

The Applicant's motion to dismiss this proceeding is denied. If the Applicant does not want a hearing it should withdraw its request for one, rather than move to dismiss it.

Contrary to its assertion, the Applicant is not entitled to a permit with standard conditions. The Department Staff met its obligation with respect to the second UPA default provision [ECL 70-0109(3)(b)] when the Chief Permit Administrator issued a timely response to the Applicant's determination request. The applicable regulations establish that the next step toward exhausting the Applicant's administrative remedies is the hearing [6 NYCRR 621.7(f)].

Furthermore, the scope of the hearing cannot be limited exclusively to whether the Department Staff properly denied the permit. The duly established hearing regulations (6 NYCRR Part 624) allow other persons to participate in the proceeding. Therefore, it would be inappropriate to limit the scope of the hearing before other persons have had an opportunity to raise substantive and significant issues about the Project.

II. SEQR Determination of Significance

It is extremely unusual for the Department Staff to refer a permit application to hearing before making a SEQR determination. By this point in the review of an application, the Department Staff normally would have completed the SEQR process, in the case of a negative determination, or accepted a DEIS, in the case of a positive determination. Consequently, even though the Applicant must request a hearing to exhaust its administrative remedies, the hearing in this matter cannot go forward because the requirements of SEQR must be met first.

In referring this matter to hearing, the Department Staff has delegated all determinations that are required of the Department as a permit-granting authority and as lead agency under SEQR to the hearing process. (See the Commissioner's Interim Decision, Peckham Materials Corp. dated January 27, 1992, DEC No. 5-5326-00021/00001-1). Therefore, it would be appropriate for me, subject to review by the Commissioner, to make a determination of significance about the application within the context of the hearing.

I shall make the determination in writing before hearing arguments on proposed issues. The SEQR determination provided by the Department Staff in response to my August 2, 1993 directive will be considered a recommended positive determination. The Applicant shall be given an opportunity to state how the Staff's recommended SEQR determination is defective, and provide information to rebut the factual basis for the Staff's recommendation. The Applicant may also argue why the current application materials are an adequate basis for making regulatory decisions under SEQR and the relevant wetlands regulations (Part 663).

The Applicant must postmark its filing about the Department Staff's recommended determination of significance by January 21, 1994. A response from the Department Staff is not authorized.

/s/
Daniel P. O'Connell
Administrative Law Judge

Date: December 21, 1993

To: Mark A. Chertok, Esq.
Sive, Paget & Riesel, P.C.
460 Park Avenue
New York, NY 10022-1906

Ann Hunter, Esq.
Assistant Regional Attorney
NYSDEC-Region 2
Hunters Point Plaza
47-40 21st Street
Long Island City, NY 11101

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