DEC acted outside its authority by creating “but-for” test to deny eligibility. East River Realty Company LLC owned several contaminated properties in the Murray Hill neighborhood of Manhattan and in 2001 entered them into the NYS Dept. of Environmental Conservation’s Voluntary Cleanup Program. The sites are former Con Edison sites, and are among the largest and most valuable development sites in the City.

Following the enactment of the State’s Brownfield Cleanup Program in 2003, East River applied to DEC for a transfer of the sites from the Voluntary Cleanup Program to the Brownfield Cleanup Program. After DEC advised East River that its application was complete, the agency delivered a final Cleanup Agreement to East River, which executed the agreement and sent it back to DEC. DEC, in an apparent change of position, refused to execute the agreement, and six months later, issued a determination denying the sites’ inclusion in the program.

DEC denied East River’s application because it determined that environmental remediation would have occurred even if the program’s benefits were not available. East River filed an article 78 petition challenging the determination, claiming that the statute did not include a “but-for” test, nor did it provide authorization to create such a test. East River further claimed that since the redevelopment of its sites would be complicated by the presence of contaminants, the sites met the program’s definition of “brownfield site,” and, as such, it was entitled to participate in the program as of right.

Judge Lewis Bart Stone rejected DEC’s denial of East River’s application, and ordered DEC to execute and deliver the Cleanup Agreement to East River. Stone ruled that East River’s sites qualified as brownfields since redevelopment of each had been complicated by “cost, time, or uncertainty.” Stone also ruled that DEC exceeded its authority when it created a “but-for” eligibility test and used it as a basis to deny East River’s application. In ruling that DEC exceeded its authority, Stone also considered several New York Supreme Court decisions addressing DEC’s exclusion of sites from the program, including HLP Properties LLC v. NYSDEC, where the court ruled that DEC’s self-created economic eligibility criteria amounted to an unauthorized exercise in lawmaking. 5 CityLand 144 (Oct. 15, 2008).

East River Realty Co. v. NYSDEC, 866 N.Y.S.2d 537 (N.Y.Cty.Sup.Ct. Oct. 21, 2008).