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Ellis, Herbert - Ruling, March 3, 1998

Ruling, March 3, 1998

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION

In the Matter of the Application of

HERBERT S. ELLIS/AQUATIC DEVELOPMENT GROUP
One Aquatic Center
P.O. Box 648
Cohoes, New York 12047

for conceptual approval of a proposal regarding the potential mitigation of impacts to
Freshwater Wetlands TN-11 located in the Bought Corners area of the Town of Colonie,
Albany County, New York pursuant to the Environmental Conservation Law ("ECL") and
Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR")

RULINGS OF THE ADMINISTRATIVE LAW JUDGE ON ISSUES

DEC Project No.

4-0126-00349/00001

Description of the Applicant's Proposal

Herbert S. Ellis/Aquatic Development Group ("Ellis" or the "Applicant") has applied to the New York State Department of Environmental Conservation (the "Department" or "DEC") for conceptual review and approval regarding potential future development and mitigation of consequent adverse environmental impacts on Freshwater Wetland TN-11 located in the Bought Corners area of the Town of Colonie, Albany County, New York.

The proposal before the Department's Region 4 Staff involves freshwater wetlands and adjacent areas on a site consisting of approximately 195 acres, which is currently vacant undeveloped land, and in part, is being used for agricultural purposes. Although Ellis does not presently propose to develop the site, he seeks conceptual review of a suggested plan to mitigate the loss of state regulated wetlands and adjacent areas on the property in anticipation of a subsequent plan to develop the site. Approval of this proposal would, according to the Applicant, restore the economic value of the property, which would then allow the parcel to be used as loan collateral for the Applicant's business ventures, as well as make the property more attractive for future development.

State Environmental Quality Review Act (SEQRA) Status and Determination of Completeness

The Department Staff determined in September 1995 that the Applicant's proposals for the Site may have a significant effect on the environment and issued a Positive Declaration. In response to the Positive Declaration, the Applicant prepared a Draft Environmental Impact Statement (DEIS) for the Project. In January 1996, the Department Staff, as Lead Agency, (a) determined the application for the above described Project was sufficiently complete for the purpose of commencing its formal review, (b) accepted the DEIS for the proposed action as complete for review purposes, and (c) initiated a public comment period on the proposal.

A legislative public statement hearing to consider the Applicant's mitigation proposal and to receive comments on the DEIS was held in the Colonie Town Hall on February 6, 1996. A variety of comments were received at and following the hearing. A Final Environmental Impact Statement (FEIS) was submitted to the Department's Region 4 Staff on or about July 14, 1997.

Since the determination of significance regarding this Project, in September 1995, occurred prior to the January 1, 1996 effective date of the current State Environmental Quality Review regulations in 6 NYCRR Part 617, this proposed action is governed by the SEQRA regulations in Part 617 which were effective from June 1, 1987 through December 31, 1995. Unless otherwise specified, all references to the SEQRA regulations in these Rulings are to the June 1, 1987 version.

Issues Discussions

Pre-adjudicatory hearing meetings to discuss potential issues regarding the Applicant's request for conceptual review were held before Administrative Law Judge ("ALJ") Robert P. O'Connor of the Department's Office of Hearings and Mediation Services in the Department's Central Office, 50 Wolf Road, Albany, New York on Tuesday, December 2, 1997 and in the Department's Region 4 Office, 1150 North Westcott Road, Schenectady, New York on Wednesday, December 10, 1997.

At these conferences, the Applicant was represented by the law firm of LeBouf, Lamb, Greene, & MacRae, L.L.P., One Commerce Plaza, Suite 2020, 99 Washington Avenue, Albany, New York 12210-2820 (Thomas S. West, Esq., of Counsel). Assisting was Dean R. Long, Director of Environmental Planning, The LA Group, P.C., 40 Long Alley, Saratoga Springs, New York 12866, the Applicant's environmental consultant.

The Department Staff was represented by Ann Lapinski, Esq., Assistant Regional Attorney, in the Department's Region 4 Office, 1150 North Westcott Road, Schenectady, New York 12306. Also attending the issues discussion meetings were Environmental Analyst 2 John H. Feltman, Senior Wildlife Biologist Karl Parker (at the December 2, 1997 meeting) and Division of Fish and Wildlife Wetlands Program Manager Patricia Riexinger (at the December 10, 1997 meeting).

Upon the conclusion of the December 10, 1997 issues discussion session, the Participants agreed to submit written briefs to the ALJ, concerning two outstanding issues relating to the Applicant's proposal. The issues under consideration are: (1) the applicability of the conceptual review process to the project proposed by the Applicant; and (2) the proper standard for permit issuance under ECL Article 24 and its implementing regulations. Briefs from both the Applicant and the Department Staff concerning these issues were received by the ALJ on December 23, 1997.

Summary Positions of the Participants

The Applicant

The Applicant maintains that the Department Staff originally recommended the conceptual review process as being appropriate for the proposed project. The Applicant further maintains that the instant project, as a component of a larger, as yet unidentified, development proposal, is ideal for consideration in the conceptual review format. The Applicant contends that, in any future development plan for the site, the proposed displacement of freshwater wetlands on the site would be fully mitigated, resulting in no net loss of wetlands benefits, values or functions. The Applicant proposes that the mitigation would be accomplished: (a) by constructing retention basins on the project site to reproduce the flood and stormwater control functions of the existing wetland and (b) by acquiring and/or creating additional wetlands off site, preferably in the same drainage basin, to compensate for the wildlife habitat, open space and aesthetic appreciation benefits of the existing wetland. The Applicant believes the Staff has exceeded the scope of their statutory and regulatory jurisdiction in requiring that development activities which adversely impact the wetlands on the site first be avoided to the extent practicable, before they will entertain the consideration of any mitigation proposals. The Applicant cites the plain language of the Department's freshwater wetlands implementing regulations, as well as Department precedent, in supporting its contentions.

The Department Staff

The Staff contends that conceptual review of any given proposal must consider an overall comprehensive land use development plan. The Staff further contends that the Applicant's proposal to mitigate the wetlands impacts is just a component of a larger development plan, and that the wetlands mitigation proposal may only be considered in that context. With respect to the applicable standards for permit issuance, the Staff additionally contends that, pursuant to the freshwater wetlands regulations and Departmental guidance documents, any development proposal for any site which contains freshwater wetlands must first and foremost seek to avoid adverse impacts on the wetlands and adjacent areas before mitigation of adverse impacts on the wetlands can be considered.

Discussion

Background

Ellis purchased the land in question 1975. During the 1970's, the Ellis parcel and adjacent properties were being intensively farmed for the production of various row crops, grains, corn, etc. Natural drainage patterns on the property were well maintained in order to maximize the acreage available for crop production.

In 1979, the Town of Colonie installed a sewer trunk line through the property, beginning a series of successive disturbances to the drainage patterns on the property. During the 1980's and into the 1990's, agricultural practices on the property changed, primarily due to farm subsidies which encouraged farmers not to grow certain crops at certain times. Rather than actively farming the entire property from boundary to boundary, the more recent practices have been to farm the property in blocks, leaving portions of the property fallow for varying periods of time. Consequently, the drainage patterns on the property have not been as well maintained as they were in previous times, although the Town of Colonie found it necessary to conduct maintenance on one or more of the drainage swales on the Applicant's property in 1995 in order to alleviate potential flooding in the vicinity of nearby residences.

Through the 1980's when the Department Staff conducted two freshwater wetlands mapping efforts within Albany County, the Applicant's parcel was not included on any freshwater wetlands maps. Based upon the unrestricted development potential of the parcel, the Applicant was able to secure loans for his business ventures by using the property as collateral. Lending institutions considered the parcel as a significant economic resource. In fact, based upon an appraisal of value in a soft market, the DEIS/FEIS puts the minimum collateral value of the parcel at between $3 and $5.5 million, assuming no encumbrances to development due to wetlands regulations.

However, with the lack of maintenance of the drainage channels and the absence of regular tillage and crop production, the freshwater wetlands characteristics which had been suppressed by the previous agricultural practices began to return to the naturally damp/wet and low-lying areas of the property. In the early 1990's, the Department Staff initiated another mapping effort to identify freshwater wetlands on the Applicant's parcel and an adjacent property. This process was concluded in 1994, with the result being that the Applicant's parcel was identified as containing some 24 to 38 acres of freshwater wetlands, along with a proportionately large adjacent area, all included as part of state regulated wetland TN-11.The Applicant claims there are 24 acres of wetlands on the site; the Staff contends there may be as many as 38 acres of wetlands present. To date there has been no "ground-truthing" effort to delineate the wetland boundaries and survey the regulated areas on the site.

Wetland TN-11 received a Class II designation from the Department Staff, meaning it is ranked second in importance among the wetlands in the state (Class I being the highest ranking and Class IV being the lowest ranking in the hierarchy set forth in 6 NYCRR 664.5) based upon the degree to which wetlands provide the various benefits cited in ECL 24-0105(7) and their ability to perform wetlands functions. The wetlands and adjacent areas on the Applicant's property are largely linear in nature, generally following the natural watercourses associated with the Salt Kill, a designated stream on the Town of Colonie protected watercourse areas map. In the instant case, of the wetland benefits enumerated in the ECL and in 6 NYCRR 664.3, the wetlands on the Applicant's property provide open space and aesthetic appreciation, wildlife habitat and, to some extent for the property's neighbors, recreation. However, the predominant wetland benefit provided by freshwater wetland TN-11 on the Applicant's property is flood and stormwater control.

With the designation of state regulated wetlands on the site came the requirement for the Applicant to comply with the statewide minimum land use regulations set forth in 6 NYCRR 665.7(g). These regulations impose development restrictions in the wetlands and adjacent area portions of the site which assertedly reduced the potential value of the site, both for a sale to a prospective developer and as collateral for any loans which the Applicant might seek to secure for his business enterprises. A 1992 appraisal, taking into account these potential development restrictions, valued the parcel at $1.9 million, even assuming the extent of the wetland areas could be minimized be reinstituting active farming on the property. Further, in 1997, a lender refused to extend credit exceeding $1.7 million with the land as collateral, due to the unresolved wetlands issues.

In light of these circumstances, in 1995, with the encouragement of certain Department Staff members, the Applicant sought to pursue a conceptual review of a wetlands mitigation project, with the aim being to get a commitment from the Department that the property could ultimately be developed in a manner which would maintain the benefits provided by the freshwater wetlands and adjacent areas and which would increase the loan collateral value, based on future potential development of the site, to a minimum of $3 million.

Although it is not the intent of the Applicant to actually develop the site, for purposes of the conceptual review, the Applicant proposed four different "paper" projects with varying configurations and features. These projects represented scenarios which could potentially comply with the current Town of Colonie subdivision/zoning regulations and which would involve differing impacts to the on-site wetlands/adjacent areas, ranging from virtually complete elimination of the current wetlands to near total avoidance of the wetlands. Respectively, these plans ranged from a proposal with a high of 270 single family homes to a less dense development of 240 homes, to two additional proposals which actually were considered to be unacceptable to the Applicant in terms of development potential, due to the lack of monetary return offered by a 160 lot proposal and a 90 lot plan.

The Department Staff's response was that the 90 lot proposal could potentially be approved with little, if any, alteration. The 160 lot plan could potentially be approved with some modifications. The Staff, however, deemed the 240 and 270 home proposals unacceptable due to the extent of potential adverse impacts on the wetlands and adjacent areas.

The Applicant and Staff are at odds, therefore, with the two proposals for the least dense development of the property and least impact on the wetlands being unacceptable to the Applicant for monetary reasons, and the two most dense development proposals with consequent most severe impacts to the wetlands being unacceptable to the Staff for environmental reasons.

Protracted discussions between the Applicant and Staff without any resolution led to the Applicant seeking a hearing on the conceptual review request. The pre-hearing issues discussions have now resulted in the following issues for a determination prior to proceeding with a hearing.

The Issues

The issues to be considered in this ruling are:

(1) Whether the conceptual review process specified in 6 NYCRR 621.11 is applicable to a project consisting solely of mitigation of adverse impacts to a freshwater wetland, absent any specific land development scenario; and

(2) Whether a project which proposes to fully mitigate all adverse wetlands impacts, and which would result in no net loss of wetlands benefits or values, pursuant to 6 NYCRR 663.5(g), relieves the Applicant of having to meet the weighing standards of 6 NYCRR 663.5(e)(2), specifically the standards requiring avoidance of the freshwater wetland and adjacent area to the extent practicable and that requiring minimization of any degradation to, or loss of, any part of the wetland or its adjacent area.

The determination regarding these two issues is dependent on the interpretation of the applicable regulations, the relevant portions of which are attached hereto as Appendix "A".

Rulings on Proposed Issues

- Conceptual Review

Conceptual review was established by statute in ECL 70-0117(4) and by regulation in 6 NYCRR 621.11 enacted in 1977. From the language of the Department's implementing regulations it is clear that the drafters of the regulations contemplated the provisions for conceptual review would be applied to large and/or complex development projects involving major land uses, e.g. -- housing subdivisions, regional shopping centers, etc. (See 6 NYCRR 621.11(a)(1) in Appendix "A", attached hereto.)

Conceptual review allows a sponsor to obtain a decision regarding the acceptability of a regulated action prior to investing substantial time and money in final project planning and permit application preparation. In this context, the intent of conceptual review has been to attempt to introduce more certainty to the regulatory process, offer sponsors a more attractive framework for planning and development and offer a means to reduce overall time and costs associated with obtaining final approvals for controversial projects.

The Department has employed the conceptual review process in the siting of solid waste management facilities, e.g. - landfills, incinerators/resource recovery facilities. (See for example Integrated Waste Systems, Inc., May 15, 1996, Decision of the Commissioner.) In the instance of solid waste management projects, an early binding approval from the Department on site selection and methodology can provide a foundation upon which the project sponsor can invest in more intensive site investigation and facility design with enhanced assurance that in concept the project plans appear to be consistent with current state policies and standards.

Conceptual review is an optional process, initiated at a project sponsor's discretion. As is clear from the language of 621.11(a), the sponsor may request conceptual review of an entire project or only specific components thereof. In the instant case, the Applicant, anticipating that the property will eventually be developed in some fashion, and assuming that some degree of site preparation will impact the freshwater wetlands and adjacent areas on the site, has proposed that conceptual review is appropriate to determine the consistency with the state's environmental standards of the wetlands alteration component of some as yet undefined overall development project. In fact, the Applicant maintains that the wetlands alteration/mitigation proposal is, in itself, a "project" which qualifies under the regulations for conceptual review. A "project" is an action that requires a permit. [See 6 NYCRR 621.1(q).]

The Applicant, while having submitted four possible "paper" development projects solely to satisfy the demands of the Staff, has steadfastly maintained that he is not interested in developing the property. He would prefer to leave that to another entity or some successor in interest to the property. In reality, the Applicant seeks only to gain the Department's approval for a conceptual proposal which could be used as the basis for someone else to develop the property at some future time. By gaining such an approval, the Applicant contends that, (a) the property would be more attractive to a real estate developer, and (b) with that attractiveness in place, the potential market value of the property would increase, thus stimulating a lending institution to increase the amount of a working capital loan using the parcel as collateral.

The Applicant is breaking new ground with this proposal. Heretofore, to the best of my knowledge, all previous conceptual review requests presented to the Department were founded on proposals for relatively immediate and actual development, for the most part, as noted above, of solid waste management facilities. In this case, no actual development plan exists. However, for purposes of these Rulings, I accept the proposition that there is no bar to the use of the conceptual review process set forth in 6 NYCRR 621.11 to analyze a project consisting solely of a proposal to mitigate impacts on freshwater wetlands, such a project being a precursor of some overall undefined development proposal which may or may not occur in the future.

However, as noted in March 1, 1996 correspondence to the Applicant from Herbert E. Doig, a former DEC Deputy Commissioner, "The conceptual review process does not eliminate the need to obtain all necessary permits ..., nor does it allow an applicant to avoid complying with the regulatory standards that exist in the permitting process." The conceptual review process "is intended to provide a binding decision as to the general acceptability of a proposed project ...".

It should be noted that if approval is granted through the conceptual review process, such approval and any consequent terms and conditions of approval would be binding on the Department, but only as regards a proposed project's "substantive consistency with current State environmental policy and standards at the time of submission of an application ...". The decision would be binding as long as the project remains the same.

In this case, with such a highly conceptualized proposal as the one under consideration here, with its stark lack of detail and definition, particularly for any off-site mitigating measures the description of anticipated off-site mitigation of wetlands impacts is limited to the following: "Another wetland area of approximately 10 to 12 acres, either existing or to be created, will be acquired by the applicant and permanently preserved. This wetland will be on-site or off-site, preferably in the same drainage basin as the wetland impacted by this project." (See DEIS, 11/95, p. 12.), there is a troubling uncertainty as to what a final decision in this proceeding would offer the Applicant with respect to assurance that a future development could be approved. Prior to any development activities on the site, a developer may require several State permits from this Department, e.g. -- a freshwater wetlands permit, a stormwater State Pollutant Discharge Elimination System (SPDES) permit, a water quality certification pursuant to 401 of the Federal Water Pollution Control Act and, possibly, a water supply permit to extend an existing water district to serve the parcel. All applications for Department permits are judged on their specific merits, and the details of any fully developed proposal for future wetlands alterations and land uses on the Applicant's property would be subject to fresh scrutiny by the Department Staff to determine compliance with the applicable regulatory standards, including SEQRA. It is not inconceivable that such scrutiny of an overall development proposal could lead to denial of the requested permits.

Should the Applicant or some other entity eventually pursue a fully matured project, it can be anticipated that additional approvals may also be required from the U.S. Army Corps of Engineers for a federal wetlands permit and from the Town of Colonie for matters under local jurisdiction. As of the date of the issues discussions, the Applicant had not coordinated his proposal with either the Corps or the Town. The DEIS/FEIS only mentions the jurisdiction of the Corps as an aside, and discusses only in a very cursory manner the effects of the proposed wetlands alterations with respect to the Town's Significant Environmental Area/watercourse protection regulations. It is desirable for the State's conceptual review process to incorporate the positions of federal and local agencies. However, neither federal nor local government agencies would be bound by any agreements which might ultimately be made between the Applicant and this Department.

- Freshwater Wetlands

With the September 1, 1975 enactment of the Freshwater Wetlands Act, ECL Article 24, the State declared in 24-0103 that:

"It is declared to be the public policy of the state to preserve, protect and conserve freshwater wetlands and the benefits derived therefrom, to prevent the despoliation and destruction of freshwater wetlands, and to regulate use and development of such wetlands to secure the natural benefits of freshwater wetlands, consistent with the general welfare and beneficial economic, social and agricultural development of the state."

Thus, the ECL calls for a balancing of interests between environmental concerns and the need to ensure the beneficial economic, social and agricultural development of the state. In the instant case, the Department Staff is an advocate for the preservation of the wetlands presently existing on the site and the benefits provided by the wetlands. The Applicant, on the other hand, proposes a project which would destroy the wetlands as they currently exist on the site in order to advance his economic interest. To compensate for this wetlands destruction, the Applicant would construct retention basins on the site which would allegedly preserve the wetland benefits related to flood and stormwater control in the upper reaches of the Salt Kill watershed. He also proposes to acquire and/or create wetlands areas off site to reproduce the wildlife habitat and open space and aesthetic appreciation values lost through the destruction of on-site wetlands.

To ensure that the balancing required by the statute was an integral part of the permit process, the Department, in the mid-1970's, promulgated regulations which spelled out the procedures and standards for obtaining a permit to conduct various alterations within any wetland area containing at least 12.4 acres or, if smaller, being of unusual local importance. Thus, even prior to any Departmental mapping of freshwater wetlands in Albany County, the implementing regulations for permits under the Freshwater Wetlands Act were found in 6 NYCRR Part 662 (Freshwater Wetlands -- Interim Permits). While recognizing the need for an agricultural exemption in 662.2(b)(2), the regulations nevertheless required interim permits for most other activities which might be undertaken in a freshwater wetlands area, even though the area might not have yet been mapped by the Department Staff. The standards for issuance of interim permits in 662.6 required a cognizance of the effects of a proposal on, among other factors, protection or enhancement of the several functions and benefits of the wetlands. Additionally, no permit could be issued unless the proposed alteration was found to be consistent with the stated declaration of policy in the ECL, as noted above; to be compatible with the public health and welfare; was reasonable and necessary; and had no reasonable alternative on a site which was not a freshwater wetland or adjacent area.

With the active farming which was occurring on the site at that time, it is easy to understand that the environmental value of the drainage ditches on the property might not have been recognized. The multiple benefits which these watercourses provided were probably masked by the intensive row crop production. Furthermore, in the mid to late 1970's there was not the awareness of freshwater wetlands and their benefits that exists today. It is clear, however, that the drainage areas comprised well over 12.4 acres of the subject parcel. Therefore, with the exception of the agricultural activities which were occurring on his property, any other actions related to development of the property which the Applicant may have contemplated were subject to the freshwater wetlands regulations, beginning with the promulgation of the interim permit regulations in June 1976.

Freshwater wetlands are not static entities. Rather, they are very dynamic and subject to change from a variety of factors. It is not unusual for a change in agricultural practices to trigger a change in the characteristics and size of a freshwater wetlands area such as TN-11. Freshwater wetlands in New York State are determined by the presence of various types of aquatic and semi-aquatic vegetation, as defined in ECL 24-0107. With the changes in farming which occurred on the site in the 1980's, areas near the drainage ditches which had previously been used for growing crops gradually began reverting to wetlands plants. Thus, it is understandable that areas which were actually wetlands were not originally mapped as such when the first two wetlands mapping evolutions occurred in Albany County during the 1980's, because at that time the vigorous row crops, intensive soil manipulation and good drainage patterns served to suppress the growth of wetland vegetation. It is equally plausible that by the early 1990's, these areas had changed sufficiently with a change in the crop planting regimen, no tilling of the soil and a lack of maintenance of the drainage ways that the wetlands indicator species of vegetation had gained a competitive advantage so that the wetlands areas were much more readily observable, thereby causing an amendment to the Albany County Freshwater Wetlands Maps.

The conceptual review process contemplates that eventually an applicant will apply for the necessary permits for an actual project. In the instant case, where any future development of the site is likely to cause some disturbance to the wetlands and be non-agricultural in nature, the developer of the property will have to meet the prescribed standards in order to secure a freshwater wetlands permit. The standards for issuance of freshwater wetlands permits are found in 6 NYCRR 663.5. (See Appendix "A".)

The Applicant here maintains that in order to realize the greatest profits from the site and/or to maximize its loan collateral value, the wetlands present on the site must be destroyed. With his view of the Freshwater Wetlands Act and regulations and the requirement to balance the adverse impacts to wetlands TN-11 with economic and social development of the State, the Applicant has proposed actions involving draining, grading, filling, installing retention basins and acquiring and/or creating new wetlands off site that he contends will offset the adverse effects of elimination of the wetlands on his property. By manipulation of the resulting environment, the Applicant asserts that the presently existing wetlands values and benefits will be maintained. Thus the Applicant has premised its proposal for development of the existing wetland areas on mitigation of adverse impacts to those wetlands, rather than avoidance to the greatest extent possible.

The Department Staff countered that the Department's long standing policy and guidance, supported by the clear language of the Freshwater Wetlands Act and implementing regulations, as well as SEQRA, require that, to the maximum extent practicable, a project must first and foremost minimize or avoid adverse environmental impacts to an existing wetlands area. The Staff further posits that an applicant for a freshwater wetlands permit must demonstrate that a project first seeks to avoid and then to minimize degradation to, or loss of, the wetlands and its adjacent area, before mitigation efforts may be considered.

Both the Applicant and the Staff have focused their arguments on their respective interpretations of the language set forth in 6 NYCRR 663.5(e)(2) (weighing standards) and 663.5(g) (mitigation of impacts). In so doing, I find that both the Applicant and the Staff have missed a prerequisite to permit issuance: the test of compatibility, as set forth in 663.5(e)(1). As stated in 6 NYCRR 663.5(d), "a determination of compatibility and a weighing of the need against benefits lost are the criteria for decisionmaking" with respect to permit issuance.

Pursuant to 663.5(e)(1), if the three tests for compatibility are met, no other weighing standards need be considered. Those three tests are: (i) would the activity be compatible with preservation, protection and conservation of the wetland and its benefits; and (ii) would the activity result in no more than insubstantial degradation to, or loss of, any part of the wetland; and (iii) would the activity be compatible with public health and welfare.

Of the Applicant's proposed activities which can be anticipated to occur in the wetlands, i.e. - draining and altering water levels, substantially modifying drainage ditches, filling, installing retention basins and grading, the installation of retention basins is an activity with a compatibility category of "N" (usually incompatible with a wetland and its functions or benefits) and, therefore, must be tested for compatibility.

In the instant case, as to the outcome of the first of the tests for compatibility, there is not enough information before me to affirm the compatibility of the installation of retention basins with the required preservation, protection and conservation of the wetland and its benefits, although it appears that a well designed series of retention basins could potentially serve to maintain and/or even enhance the primary function of wetland TN-11, i.e. - flood and stormwater control.

As to the second test, based on the information before me, the actual installation of retention basins, linked to the other proposed activities of draining, grading, filling and modifying drainage ditches, could likely result in considerably more than insubstantial degradation to, or loss of, any part of the wetland. In fact, it is the stated objective of the Applicant to virtually eliminate the wetlands areas on his property to facilitate future development of the site for the maximum possible financial gain.

As to the third test, compatibility with public health and welfare, the regulations, at 663.5(f)(1)(ii), provide guidance on interpretation of this term: "consistency with related Federal, State and local laws, regulations and policies." As noted earlier in these Rulings, the Applicant has not yet coordinated his wetlands mitigation proposal with the Corps of Engineers or the Town of Colonie. However, as both the Department Staff and I have indicated to the Applicant, the Corps of Engineers has a significantly lower threshold than the State of New York for determining the extent of wetlands and evaluating impacts with respect to the Federal permitting program. The Applicant's proposal may not be consistent with the Federal wetlands permitting program. Furthermore, in its comments on the DEIS, the Town of Colonie indicated that the Applicant's proposal is not consistent with Chapter 195 of the Town's Code, entitled "Significant Environmental Areas".

Therefore, the portion of the Applicant's proposal regarding the installation of retention basins does not meet all of the tests of compatibility in 663.5(e)(1).

The regulations provide, in 663.5(d)(2), that if a proposed activity is identified with a compatibility category of "X" (incompatible with a wetland and its functions and benefits), in order for a permit to be issued, the activity must meet each of the weighing standards for the appropriate class wetland, as enumerated in 663.5(e)(2). Pursuant thereto, the weighing standards must be applied to all activities identified as "P(X)", and to all those activities listed as "P(N)" that do not meet the three tests of compatibility. Thus, in the instant case, all the activities which could be anticipated as part of the Applicant's wetlands mitigation project, i.e. - draining and altering water levels, substantially modifying drainage ditches, filling, and grading, all "P(X)" rated activities, as well as installing retention basins, a "P(N)" rated activity which does not meet the three tests of compatibility, are subject to each of the weighing standards to assess the appropriateness of permit issuance.

Among the weighing standards for a Class II freshwater wetland, the activity must have no practicable alternative on a site that is not a freshwater wetland or adjacent area. In other words, the wetlands/adjacent areas on the site must be avoided to the extent practicable. The two wetlands mitigation alternatives favored by the Applicant do not avoid the wetlands to the extent practicable, but rather require the piping of the drainage ways with large diameter culverts and filling/grading to destroy the wetlands as they now naturally occur on the site.

The Applicant argues that he is advancing a conceptual plan which would maintain the wetlands benefits and functions, albeit while destroying the on site wetlands. His contention is that since his proposal would compensate for such destruction by acquiring, enhancing and/or constructing equivalent or better wetlands areas off site, that the weighing standards are not applicable. The Applicant maintains that with his mitigation proposal there will be no net loss of benefits or values that have to be weighed against the standards in 663.5(e)(2).

The regulations in 663.5(g)(1) require that a mitigation proposal enhance existing benefits and/or create and maintain new wetland benefits in order to increase the likelihood that the activities proposed will meet the applicable standards for permit issuance. The Applicant's pronouncement that there will be no net loss of wetlands benefits/values as a result of his proposal is premature. One of the objectives of the conceptual review process is to minimize the investment of time and money by an applicant in not having to submit detailed project designs. The lack of specific detail is appropriate in generalizing the acceptability of a less-than-fully-developed project with the applicable environmental policy and standards. At the conceptual review stage in this instance, however, there is just not enough detail available to make a judgement as to the efficacy of the mitigation measures being proposed. For example, the regulations require that the mitigation must occur on or in the immediate vicinity of the project site. In this case, there is no indication in the materials before me that the Applicant owns, controls or has any options on properties in the immediate vicinity, other than his 195 acre parcel. Likewise, the regulations require that the mitigation area must come under the jurisdiction of the Freshwater Wetlands Act, i.e. - be a minimum of 12.4 acres in size, following completion of mitigation efforts, and that the mitigation must provide substantially the same or more benefits as lost in the destroyed wetlands. Here, the Applicant is proposing to destroy 24 or more acres of wetlands on his site, to be compensated by retention basins sized properly to maintain the flood control characteristics of the destroyed wetlands, and to create or acquire only 10 to 12 acres off site to replace the acreage of wetlands lost on his property. On its face, the Applicant's proposal seems to provide an inadequate offsetting acreage of wetlands created or acquired for those lost on site. Furthermore, while the Applicant's proposal appears to address mitigation of the flood and storm control functions of the existing wetlands area, it does nothing to adequately address the other benefits provided by the presently existing wetlands on his property. Therefore, the conceptual mitigation proposal advanced by the Applicant does not appear to comply with the requirements of 663.5(g).

Nevertheless, when the requisite permit applications are submitted, as noted previously, they will be analyzed and evaluated on their specific merits. Only then can a reasonable determination be made, in the case of a freshwater wetlands application, regarding the benefits/values which may or may not be enhanced, created and/or maintained by the implementation of a particular mitigation plan. More important in this context, however, at permit application time, the weighing standards, including the avoidance criteria, are part and parcel of the permit issuance standards for those portions of the project within the "P(X)" compatibility category and for those activities which cannot meet all three tests of compatibility. The regulations in 663.5(d)(2) do not provide for any option in the circumstance of incompatible activities, other than that the weighing standards in 663.5(e) must be employed in the decision making process.

The fact that an applicant may propose mitigation measures which do not result in a net loss of wetlands benefits/values does not alleviate the requirement in the weighing standards for an applicant proposing incompatible activities to first avoid wetlands on a project site to the extent practicable. Compliance with the avoidance requirement in the regulations is a prerequisite to any consideration of proposed mitigating measures. Any other scenario would render the Freshwater Wetlands Act and the implementing regulations so ineffective that developers could wantonly destroy wetlands under the guise of a promise to provide compensatory mitigation measures. Such mitigation measures, in the long run, might or might not function as proposed, with the end result being that in the meantime the original wetlands with their benefits and functions could essentially be lost forever, contrary to the intent and stated policy of the Act.

The Applicant's arguments based on Matter of MTF Wantagh Development Corp., September 1, 1993, Decision of the Commissioner, are unavailing in this instance. The MTF Wantagh case is distinctive in that the proposal did not totally compensate for the benefits lost through the proposed filling activity even after the proposed project had been redesigned to void the wetlands to a large extent.

Staff's arguments based on the mitigation guidelines have been disregarded, as guidelines do not have the force and effect of law and regulations. My Rulings are based solely on the ECL and regulations. Additionally, Staff has also correctly cited the applicability of the SEQRA requirements in not only a permit issuance context, but also to the conceptual review process. SEQRA, in ECL 8-0109 and 6 NYCRR 617.9(c) requires that an applicant: "to the maximum extent practicable, minimize or avoid adverse environmental effects ...".

With respect to the Applicant's financial bottom line, any real estate investment is, to some extent, speculative. There are no guarantees that any particular parcel will return a profit to the owner as the result of some future transaction, or that the property will be appraised for the amount the owner believes is appropriate. Such are the vagaries of the marketplace. In the instant case, the property was subject to the provisions of the Freshwater Wetlands Act from approximately day one of the Applicant's purchase, both occurring in 1975. Because of a change in the intensity and use of portions of the property subsequent to the Applicant's purchase, the forces of nature allowed wetlands indicator species of plants to gain a competitive advantage over other, non-wetland vegetation. These events then caused the area to be designated on the official maps as a regulated Class II wetland. Neither the Department nor its Staff representatives are responsible for the occurrence of these events.

The Applicant here maintains that without displacement of the wetlands, he cannot secure a reasonable rate of return on his property. However, the Department is not responsible for ensuring that the Applicant receives any particular return on his investment. In order to receive a permit which would allow disturbance of the wetlands on the site, the Applicant must take the necessary practicable steps to avoid the wetlands/adjacent areas. The balancing required by the Act does not relieve the Department of its responsibility to, first and foremost, require avoidance of freshwater wetlands and their adjacent areas to the extent practicable, before considering measures to mitigate the effects of destruction of these areas, when evaluating the significant adverse environmental impacts of a project. This is particularly true where an applicant has demonstrated that there are potential development proposals which could provide a significant monetary return, even though not as much as desired, while at the same time causing little or no disturbance to the wetlands/adjacent areas on a project site.

In summation, when considering the permit issuance standards, an applicant proposing activities which are incompatible with freshwater wetlands and their functions and benefits, must first meet the weighing standards in 663.5(e)(2), specifically the requirement to avoid freshwater wetlands and adjacent areas to the extent practicable and to minimize any degradation to, or loss of, any part of the wetland or its adjacent area, before advancing any mitigation plans. The conceptual plan here presented to the Department does not propose to avoid the wetlands at all, does not demonstrate that there will be only minimal degradation to, or loss of, wetlands and adjacent areas on the site, and further, does not provide enough information to allow a reasonable determination that the proposed project fully mitigates all adverse wetlands impacts and would result in no net loss of wetlands benefits or values.

Appeals

Pursuant to 6 NYCRR 624.6(e) and 624.8(d), these Rulings on party status and issues may be appealed in writing to the Commissioner within ten days of receipt of the Rulings.

Any appeals must be received at the office of Commissioner John P. Cahill (NYSDEC, Room 608, 50 Wolf Road, Albany, New York 12233-1010) no later than the close of business on March 17, 1998.

The appeals sent to the Commissioner's Office must include an original and two copies. Additionally, one copy of all appeals must be sent to me and to all others on the enclosed Service List at the same time and in the same manner as to the Commissioner. Please note that transmission of appeal papers by facsimile (fax) is not authorized.

_____________/s/_____________
ROBERT P. O'CONNOR
ADMINISTRATIVE LAW JUDGE

Dated: Albany, New York
March 3, 1998

To: Thomas S. West, Esq.
LeBouf, Lamb, Greene, & MacRae, L.L.P.
One Commerce Plaza, Suite 2020
99 Washington Avenue
Albany, New York 12210-2820

Ann Lapinski, Esq.
Assistant Regional Attorney
New York State Department of
Region 4 Office
1150 North Westcott Road
Schenectady, New York 12306

HERBERT S. ELLIS/AQUATIC DEVELOPMENT GROUP
DEC Project No. 1-0126-00349/00001
Appendix "A"

The Regulatory Framework

The following excerpts from the Department's regulations in Title 6 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("6 NYCRR") are the sections (and/or portions thereof) applicable to a determination of the issues regarding Conceptual Review and Freshwater Wetlands under consideration in the attached Rulings.

Part 621 Uniform Procedures

621.11 Conceptual review.

(a) A project sponsor may request the regional permit administrator to conduct a conceptual review of the substantive consistency of the project or any component thereof with current State environmental policy and standards at the time of submission of an application (which need not be complete) if:

(1) the project will involve a major land use (e.g., housing subdivision, planned unit development ...); or

(2) the expense of preparing detailed plans, specifications and applications, without conceptual review, will constitute an undue burden on the project sponsor, considering the risks involved and the alternatives available.

(3) In determining whether to grant conceptual review, the department shall give special consideration to cases involving projects which are likely to require multiple permits from the department, which will take place in phases over a period of time, or which involve factual determinations of a difficult issue or issues.

(j) The post-conceptual review decision is not a permit. It is intended to provide potential applicants with a binding decision from the department as to the general acceptability of a proposed project or any component or issue specified, the standards which will be applied to it and the desirable design standards. Conceptual review does not relieve an applicant of the requirement of obtaining all permits otherwise necessary, prior to commencing a proposed project.

Part 663 Freshwater Wetlands Permit Requirements

663.4 Regulatory procedures.

(d) Activities chart. Guidelines and procedural requirements for various activities are given in this subdivision. This chart is included to assist applicants and permit application reviewers in determining regulatory requirements under the act and this Part. To further assist applicants, the relative compatibility with wetlands and their adjacent areas, of the various activities, as determined in the statewide minimum land use regulations contained in section 665.7(g) of this Title, are included in parentheses whenever a permit requirement is indicated.

PROCEDURAL REQUIREMENTS FOR VARIOUS ACTIVITIES

The statewide minimum land use regulations contained in section 665.7(g) of this Title establish the compatibility categories to be used in conjunction with the different types of land use activities to be conducted upon freshwater wetlands or adjacent areas. This chart states the procedural requirements to be followed in implementing those minimum land use regulations. For activities and land uses not shown on this chart, the department must first make a determination that the activity is a regulated activity as defined in the act and section 663.2 of this Part. If the activity is regulated, then an independent determination of compatibility using the three tests for compatibility contained in the standards for permit issuance in section 663.5(e) of this Part must be used.

Area Categories:

FWW-Freshwater wetland

AA-Adjacent area

Levels of Procedural Requirements:

E-Exempt; no permit or letter of permission required

L-Letter of permission required

P-Permit required

Levels of Compatibility:

C-Usually compatible means that a regulated activity may be compatible with a wetland and its functions and benefits, although in some circumstances the proposed action may be incompatible.

N-Usually incompatible means that a regulated activity is usually incompatible with a wetland and its functions or benefits, although in some cases the proposed action may be insignificant enough to be compatible.

X-Incompatible means that a regulated activity is incompatible with a wetland and its functions and benefits.

Draining, Filling, Grading, Clear-cutting and Dredging

Generally, draining of wetlands lowers groundwater levels, may increase downstream peak flows, and may decrease water storage capacity and downstream base flow. It may also cause changes in vegetation and water temperature, increased stream bed scouring, and sediment deposition. Draining can totally destroy a wetland.

Filling decreases the number and size of wetlands, thereby decreasing their ability to collect runoff and prevent erosion and sediment deposition downstream. Certain fill materials may adversely affect water quality. Disposal of dredged material may result in erosion and cause turbidity and sediment deposition. Filling eliminates wetland habitat for fish and wildlife, may alter the water table and groundwater flow and adversely affect groundwater recharge, and can irreversibly destroy a wetland.

Grading a wetland or adjacent area can substantially alter surface water drainage and flow patterns, may temporarily increase erosion, and may eliminate fish and wildlife habitat.

Clear-cutting removes the vegetative cover of wetlands and may reduce their ability to absorb water and serve as habitat. It may also cause soil erosion.

Dredging or excavation may increase water depth and remove wetland vegetation, thus altering the basic characteristics of, and perhaps destroying, wetlands. Fish and wildlife feeding or reproductive capacities may be altered, as may cover types, turbidity, sediment deposition, and erosion patterns.

Any of these activities can cause the permanent loss of benefits provided by wetlands, and may, in fact, destroy wetlands entirely.

Items Activities Procedure and Compatibility by Area
FWW AA
17 Draining and altering water levels, except as part of an agricultural activity P(X) P(X)
19 Constructing, expanding or substantially modifying drainage ditches, except as part of an agricultural activity. P(X) P(N)
20 Filling, including filling for agricultural purposes P(X) P(N)
21 Installing or creating a dry well, retention basin, filter, open swale, or pond P(N) P(N)
25 Grading, and dredging not included in item 26 P(X) P(N)

663.5 Standards for issuance of permits and letters of permission.

(a) A person proposing to conduct an activity that requires a permit or letter of permission, as described in section 663.4(d) of this Part, must meet the standards for permit issuance and receive a permit or letter of permission prior to commencing that activity. The burden of showing that the proposed activity will comply with the policies and provisions of the act and this Part rests entirely on the applicant.

(c) In granting, denying or modifying a permit, the commissioner shall apply the standards for permit issuance contained in subdivision (e) of this section in conjunction with the classification of the subject wetland as indicated on the official freshwater wetlands map filed by the department, and as established in Part 664 of this Title. In applying these standards, the commissioner will consider the effects of the proposed activity regardless of political boundaries.

(d) As shown in the chart in subdivision (e) of this section, a determination of compatibility and a weighing of need against benefits lost are the criteria for decisionmaking. The three tests for compatibility must be used for all activities listed in the minimum land use regulations and section 663.4(d) of this Part that carry a compatibility category of "C" or "N" as defined in Part 665 of this Title and in section 663.4(d).

(1) When the three tests of compatibility given in the chart in subdivision (e) of this section are met, no other weighing standards need apply, regardless of the wetland's classification, and a permit, with or without conditions, may be issued for the proposed activity. In conjunction with the three-part test, the statewide minimum land use regulations or a local variance from them that has been duly adopted according to the provisions of Part 665 of this Title are the basis for determinations of compatibility.

(2) If the proposed activity cannot meet all three tests of compatibility or if it is identified as "X," incompatible, then, for a permit to be issued, the activity must meet each of the weighing standards listed in the chart in subdivision (e) of this section for the classification of the wetland that would be affected by the proposed activity.

(e) Standards for Permit issuance.

(1) Compatibility. These three tests are to be used to determine the compatibility of all activities identified as P(C) or P(N) in section 663.4(d) of this Part or for any actions not listed in section 663.4(d). If all three of the following tests of compatibility are met, no other weighing standards need be met, regardless of the wetland class. A permit, with or without conditions, may be issued for a proposed activity on a wetland of any class or in a wetland's adjacent area, if it is determined that the activity (i) would be compatible with preservation, protection and conservation of the wetland and its benefits, and (ii) would result in no more than insubstantial degradation to, or loss of, any part of the wetland, and (iii) would be compatible with public health and welfare.

(2) Weighing. These weighing standards must be applied to all activities identified as P(X) in section 663.4(d) of this Part, and to all those activities listed as P(C) of (N) in section 663.4(d) or not listed in section 663.4(d) that do not meet the three tests of compatibility listed in section 663.5(e)(1). If the proposed activity is listed as (X) or cannot meet the three tests for compatibility, then a permit may be issued only if the proposed activity meets each of the standards below for the class of wetland affected:

For wetland Classes I, II, III and IV, the proposed activity must be compatible with the public health and welfare, be the only practicable alternative that could accomplish the applicant's objectives and have no practicable alternative on a site that is not a freshwater wetland or adjacent area.

For wetland Classes I, II, and III, the proposed activity must minimize degradation to, or loss of, any part of the wetland or its adjacent area and must minimize any adverse impacts on the functions and benefits that the wetland provides.

Class II wetlands

Class II wetlands provide important wetland benefits, the loss of which is acceptable only in very limited circumstances. A permit shall be issued only if it is determined that the proposed activity satisfies a pressing economic or social need that clearly outweighs the loss of or detriment to the benefit(s) of the Class II wetlands

(f) Interpretation of some terms used in subdivision (e) of this section.

(1) Public health and welfare. Those concerns include:

(i) consistency of the proposed activity with physical health, if necessary, as judged by health professionals; and

(ii) consistency with related Federal, State and local laws, regulations and policies.

If a proposed activity is inconsistent with physical health, or with any related laws, regulations and government policies, this would weigh against issuing a permit under the act until such conditions were met that would make the proposed activity consistent with these provisions.

(2) Only practicable alternative. A proposed activity is the only practicable alternative if no other is physically or economically feasible. This does not, however, mean that the most profitable or least costly alternative is the only feasible one nor that the least profitable or more costly alternative is the only feasible one.

(3) Economic and social need. When the economic and social need for the proposed activity is considered, the economic and social burden that would be imposed on the public shall be considered. The public economic and social burden may include: associated services, such as sewer systems, schools, and fire and police protection, necessitated by the proposed activity; prevention of contamination, flood or other damage to the proposed development on the wetland by methods such as channelization, alteration of land, alteration of water flow, draining or construction of dams, dikes or levees; and/or services and repairs, such as medical care, pumping, cleaning, dredging and emergency assistance as a result of contamination, flooding or other damage to the proposed development on the wetland. Nothing in this section precludes the consideration of any issue which must be addressed under the State Environmental Quality Review Act (article 8 of the Environmental Conservation Law).

(5) Specific Class II standards.

(i) "... loss of which is acceptable only in limited circumstances." Permits for most activities that could not avoid causing a loss of or detriment to a benefit provided by a Class II wetland would not be approved.

(ii) "... satisfies a pressing economic or social need..." Pressing should suggest that for the need to outweigh the loss of or detriment to a benefit of a Class II wetland,it must be urgent and intense, though it does not have to be necessary or unavoidable.

(iii) "... clearly outweighs..." means that the need for the proposed activity must outweigh the loss of or detriment to the benefits in a way that is beyond serious debate, although there does not have to be a large or significant margin between the need and the loss.

(g) Mitigation of impacts.

(1) The applicant may suggest a proposal to enhance the existing benefits provided by a wetland or to create and maintain new wetland benefits in order to increase the likelihood that a proposed activity will meet the applicable standards for permit issuance. Such a proposal must meet the following provisions:

(i) the mitigation must occur on or in the immediate vicinity of the site of the proposed project;

(ii) the area affected by the proposed mitigation must be regulated by the act and this Part after mitigative measures are completed; and

(iii) the mitigation must provide substantially the same or more benefits that will be lost through the proposed activity.

(2) Any mitigation considered as part of a permit granted pursuant to this Part will be included as a condition on such permit and must be complied with as mandatory if other work is started or completed.

(3) If mitigation proposed does not totally compensate for lost values or benefits that would be lost by the proposed activity, then the net loss of benefits must be assessed. Any unmitigated net loss of wetland values must then be weighed according to standards contained in section 663.5 of this Part.

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