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Conversion of Water to Steam and Steam to Water Did Not Constitute a Manufacturing Process—Therefore Petitioner Was Not Entitled to Manufacturing Tax Credits in Connection with the Operation of Its “Boiling Water” Nuclear Power Facilities—The Certification Prerequisite for Pollution Tax Credits Is Not Preempted by Federal Law which Regulates the Construction and Operation of Nuclear Power Facilities

The Third Department, in a full-fledged opinion by Justice Garry, determined that petitioner, the owner of two nuclear power plants, was not entitled to manufacturing tax credits or pollution tax credits under the Tax Law. The production of electricity is specifically excluded from the range of “manufacturing” for which manufacturing credits are available. The petitioner argued that the water which is turned into steam and then back into water (to operate the turbines) constituted a manufacturing process within the meaning of the Tax Law. The Third Department disagreed, describing the process as recycling, not manufacturing. The pollution tax credits are available only to facilities certified by the Department of Environmental Conservation as compliant with state environmental, public health and sanitary rules. Petitioner’s facilities were not so certified. The Third Department determined that the state certification requirement was not preempted by federal law, which exclusively regulates the construction and operation of nuclear power facilities, because tax credits do not regulate the construction or operation of such facilities. Petitioner was not, therefore, entitled to pollution tax credits. With regard to the manufacturing tax credits, the court explained:

Manufacturing is defined as “the process of working raw materials into wares suitable for use or which gives new shapes, new quality or new combinations to matter which already has gone through some artificial process by the use of machinery . . . and other similar equipment” (Tax Law former § 210 [12] [b] [ii] [A]), and “‘processing’ speaks to an industrial activity related to manufacturing” … . Here, the water that is converted to steam by petitioner’s assets is then converted back to its original form as water and then to steam again in an ongoing, continuous cycle that makes no permanent change in the water and yields no final product. This is more akin to recycling than to manufacturing. On these facts, we cannot find it irrational for the Tribunal to conclude that the claimed assets were not principally engaged in producing any tangible property other than electricity … . Petitioner has neither established that its interpretation of the governing statute is the only reasonable construction nor that the Tribunal’s interpretation was “irrational or unreasonable”…  and, thus, has not shown that the Tribunal’s determination that it is ineligible for the manufacturing tax credits should be reversed.  Matter of Constellation Nuclear Power Plants LLC v Tax Appeals Trib. of the State of N.Y., 2015 NY Slip Op 06183, 3rd Dept 7-16-15

 

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Failure to Strictly Comply with the Procedure Mandated by the State Environmental Quality Review Act (SEQRA) Required Annulment of the Town’s Negative Declaration Re: the Construction of a Casino and Resort

The Fourth Department, with two concurring and one dissenting justice, determined that the town’s negative declaration under the State Environmental Quality Review Act (SEQRA) with respect to the construction of a casino and resort should have been annulled because the town did not strictly comply with mandated procedure. Specifically the negative declaration did not include a “reasoned elaboration” as required by the relevant regulation. A document prepared by the town’s counsel explaining the reasons for the negative declaration was never approved or adopted by the town board and therefore did not meet the statutory/regulatory “reasoned elaboration” requirement:

It is well settled that SEQRA’s procedural mechanisms mandate strict compliance, and anything less will result in annulment of the lead agency’s determination of significance … . “[L]iteral rather than substantial compliance with SEQRA is required” … . Here, 6 NYCRR 617.7 (b) (4) requires that, in making the determination of significance, the lead agency—in this case the Town Board—must “set forth its determination of significance in a written form containing a reasoned elaboration and providing reference to any supporting documentation.” We conclude that the intent of the regulation is to focus and facilitate judicial review and, of no lesser importance, to provide affected landowners and residents with a clear, written explanation of the lead agency’s reasoning at the time the negative declaration is made. We reject respondents’ contention that we should search the entire record to discern the Town Board’s reasoning as of June 12, 2014 in making the determination to issue the negative declaration. “A record evincing an extensive legislative process . . . is neither a substitute for strict compliance with SEQRA’s [written] reasoned elaboration requirement nor sufficient to prevent annulment” … . We therefore reverse the judgment and grant the petition, thereby annulling the negative declaration and vacating the site plan approval and all related resolutions. Matter of Dawley v Whitetail 414, LLC, 2015 NY Slip Op 06082 4th Dept 7-10-15

 

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Claims Against the State Based Upon Recurrent Flooding Properly In Supreme Court as Opposed to the Court of Claims/Criteria for Inverse Condemnation of Property Explained (Not Met Here)

The Fourth Department, over a two-justice dissent, determined that an action against the state alleging recurrent flooding of plaintiffs’ property was properly in Supreme Court, despite the statutory requirement that claims against the state for monetary damages be brought in the Court of Claims. The Fourth Department held that the state did not demonstrate that the essential nature of the claim was to recover money. The Fourth Department further determined that the cause of action for inverse condemnation was properly dismissed, explaining the criteria:

Contrary to defendant’s contention, the court properly denied that part of its cross motion seeking summary judgment dismissing all claims for money damages. Although defendant is correct that ” claims that are primarily against the State for damages must be brought in the Court of Claims, the Supreme Court may consider a claim for injunctive relief as long as the claim is not primarily for damages’ ” (… see Court of Claims Act § 9 [2]). “Whether the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim, is dependent upon the facts and issues presented in a particular case” … . Here, defendant failed to establish in support of its cross motion that the essential nature of the causes of action for negligence, continuing nuisance, and continuing trespass is to recover money damages, and thus the court properly declined to grant summary judgment dismissing those causes of action.

We agree, however, with the further contention of defendant that the court erred in denying that part of its cross motion seeking summary judgment dismissing the cause of action for inverse condemnation, and we therefore modify the order accordingly. That cause of action alleged that the flooding intruded onto plaintiffs’ properties and interfered with their property rights to such an extent that it constituted “a constitutional taking requiring [defendant] to purchase the properties from plaintiffs.” It is well settled that such a “taking can consist of either a permanent ouster of the owner, or a permanent interference with the owner’s physical use, possession, and enjoyment of the property, by one having condemnation powers” … . “In order to constitute a permanent ouster, defendant[‘s] conduct must constitute a permanent physical occupation of plaintiff’s property amounting to exercise of dominion and control thereof’ ” … .

Here, defendant met its burden on its cross motion with respect to the cause of action for inverse condemnation by establishing as a matter of law that any interference with plaintiffs’ property rights was not sufficiently permanent to constitute a de facto taking … . Greece Ridge, LLC v State of New York, 2015 NY Slip Op 06072, 4th Dept 7-10-15

 

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Area in the Vicinity of the Indian Point Nuclear Power Facility Properly Classified as a Statutorily Protected Environmental Habitat

The Third Department affirmed the Secretary of State’s expansion of a statutory “significant coastal fish and wildlife habitat area” along the Hudson River in the vicinity of the Indian Point nuclear power facility.  The petitioner, the owner of Indian Point, sought to have the designation of the area as a statutorily protected environmental habitat annulled. The Third Department (1) explained a court’s powers when reviewing an agency’s interpretation of its own regulations; (2) determined the agency did not engage in formal rulemaking (which would be subject to the stringent procedural requirements of the State Administrative Procedure Act); and (3) determined certain documents were properly withheld re: petitioner’s Freedom of Information Law (FOIL) requests:

When an agency interprets a regulation that it promulgated, deference is afforded to that agency’s interpretive approach unless it is “irrational or unreasonable” … . To this end, the promulgating agency’s interpretation may not be adjudged irrational simply because other rational constructions of the regulatory provision in question exist …, nor because the promulgating agency’s reading of the relevant regulatory language either broadens its plain-language scope … or amounts to a “strict[ly] literal interpretation” … . Furthermore, “the determination of an agency acting pursuant to its authority and within its area of expertise is[, similarly,] entitled to judicial deference” … . In contrast, an agency’s interpretation of one of its own regulations is not entitled to deference if that interpretation contradicts the plain language of the regulation (see Matter of Elcor Health Servs. v Novello, 100 NY2d at 280), and an agency may be deemed to have acted irrationally if an interpretation of a regulation marks an unsubstantiated departure from the agency’s previous position on a given subject … . * * *

State Administrative Procedure Act § 102 (2) (a) (i), in pertinent part, defines a “[r]ule” as “the whole or part of each agency statement, regulation or code of general applicability that implements or applies law.” In contrast, State Administrative Procedure Act § 102 (2) (b) (iv) excludes from this statutory definition “forms and instructions, interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory.” While “there is no clear bright line between a ‘rule’ or ‘regulation’ and an interpretative policy,” an agency does not engage in formal rulemaking when the practical effect of an agency’s updated policy is that a discrete group of regulated entities or individuals likely will be subjected to a greater degree of regulatory scrutiny than are the majority of those regulated by the agency … . When an agency engages in a course of regulatory action that amounts to formal rulemaking but does not comply with the procedural requirements of State Administrative Procedure Act article 2, that regulatory action must be annulled … .

We agree with respondents that the habitat boundaries’ modification that gave rise to Hudson Highlands did not amount to formal rulemaking.  * * *

In response to petitioners’ discovery and Freedom of Information Law requests, respondents withheld a small number of documents pursuant to Public Officers’ Law § 87 (2) (g), which allows for “people within an agency to exchange opinions, advice and criticism freely and frankly, without the chilling prospect of public disclosure” … . Supreme Court correctly concluded that “respondents’ interest in maintaining the confidentiality of the records and in allowing the candid exchange of ‘opinions, advice and criticism'” was valid and outweighed petitioners’ interest in having them. Petitioners argue that respondents waived the deliberative process privilege by describing the agencies’ decision-making process within the scientists’ affidavits. We find petitioners’ claims that respondents have waived the deliberative process privilege to be unpersuasive … . Matter of Entergy Nuclear Indian Point 2, LLC v New York State Dept. of State, 2015 NY Slip Op 05988, 3rd Dept 7-9-15

 

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Under the Public Trust Doctrine, Only the Uses of the Dedicated Parkland Which Were Contemplated by the Relevant Provisions of the NYC Administrative Code Are Allowed—The Code Provisions Authorized Construction of Facilities Directly Related to Shea Stadium (Now Demolished)—Under Standard Rules of Statutory Construction, the Meaning of the Code Provisions Cannot Be Stretched to Allow the Construction of a Shopping Mall

The First Department, in a full-fledged opinion by Justice Mazzarelli, determined that provisions of the NYC Administrative Code could not be interpreted to allow the construction of a shopping mall in the area where Shea Stadium once stood. Rather the code provisions allowed only construction which was relevant to the stadium. Under the public trust doctrine only the uses of the dedicated parkland contemplated by the code provisions were authorized

This dispute turns on whether the plain language of Administrative Code § 18-118 compels a narrow use of the parkland in question such that any additional construction on it must be directly related to a stadium, or whether any such construction on the parkland must only be related to one of the purposes delineated in § 18-118(b). The proper interpretation of the statute is critical in this case, because, under the public trust doctrine, dedicated park areas in New York are impressed with a public trust for the benefit of the people of the State, and their “use for other than park purposes, either for a period of years or permanently, requires the direct and specific approval of the State Legislature, plainly conferred” … . Stated differently, parkland may be alienated or leased for non-park purposes as long as authorized by the legislature …, and the “legislative authority required to enable a municipality to sell its public parks must be plain” … . * * *

… [T]he public trust doctrine is clear that any alienation of parkland must be explicitly authorized by the legislature. No reasonable reading of Administrative Code section 18-118 allows for the conclusion that the legislature in 1961 contemplated, much less gave permission for, a shopping mall, unrelated to the anticipated stadium, to be constructed in the Park. Further, it is simply not in our power to set the doctrine aside, no matter how worthy a proposed use of parkland may be. Here, while there is a legislative mandate for the use of the Park, that mandate does not encompass the use proposed by respondents. Matter of Avella v City of New York, 2015 NY Slip Op 05790, 1st Dept 7-2-15

 

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Motion to Intervene by Members of a De-Certified Class Should Have Been Granted—Class Members Allowed to Sue In Their Individual Capacities

The Second Department determined the motion to intervene by plaintiffs and 167 residents in a de-certified class action alleging environmental damage resulting from emissions from defendant’s (BNL’s) lab should have been granted. The action began as a class action suit which was dismissed without prejudice. Then, in accordance with CPLR 1013, the individuals in the class brought a motion to intervene accompanied by a complaint which was denied by Supreme Court.  The Second Department held the motion to intervene should have been granted and further held that the statute of limitations had been tolled from the time the class action proceedings were commenced:

… [T]he plaintiffs, along with 167 members of the proposed classes, moved together for leave to allow those 167 proposed class members to intervene in the action as plaintiffs pursuant to CPLR 1013, on the ground that “when a class action is de-certified, putative members of the de-certified class are given the opportunity to intervene into the case because of their allegations of common questions of law and fact.” The plaintiffs and the proposed intervenors (hereinafter collectively the appellants) alleged that the proposed intervenors owned property in the vicinity of BNL in 1996 and after, and presented common questions of law and fact with respect to loss of property values, and the cost of using municipal water instead of well water. They submitted a third amended complaint in support of their motion. * * *

… [T]he causes of action of the proposed intervenors are all based upon common theories of liability and, thus, satisfy the requirement of CPLR 1013 that their causes of action involve common questions of law or fact. Contrary to the Supreme Court’s conclusion, BNL would not be faced with a “plethora of new claims.” Moreover, BNL did not demonstrate that intervention would substantially prejudice any party, or cause undue delay … .

To the extent BNL argues, as an alternate ground for affirmance , that the claims of the proposed intervenors are time-barred, this contention is without merit. The statute of limitations applicable to this toxic tort action is the three-year statute of limitations pursuant to CPLR 214-c, which runs from the date of discovery or the date when the injury should have been discovered through the exercise of due diligence … . In American Pipe & Constr. Co. v Utah (414 US 538, 553), the United States Supreme Court held that, under the federal class action rule, commencement of a class action suit tolls the running of the statute of limitations for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status. New York courts have adopted this rule … . Osarczuk v Associated Univs., Inc., 2015 NY Slip Op 05653, 2nd Dept 7-1-15

 

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City Had Not Impliedly Dedicated Certain Parcels of Land as Public Parklands—Therefore the Parcels, Which Had Been Used as Public Parks, Were Not Protected by the Public Trust Doctrine and Could Be Sold by the City Without the Approval of the State Legislature

The Court of Appeals determined certain city-owned parcels of land which had been used as public parkland had not been impliedly dedicated as public parklands.  Therefore the parcels were not under the protection of the public trust doctrine and could be sold by the city without the approval of the state legislature:

In support of their appeal, petitioners again advance their argument that the City’s actions manifest its intent to impliedly dedicate the parcels as parkland. Under the public trust doctrine, a land owner cannot alienate land that has been impliedly dedicated to a public use without obtaining the approval of the Legislature … . A party seeking to establish such an implied dedication and thereby successfully challenge the alienation of the land must show that: (1) “[t]he acts and declarations by the land owner indicating the intent to dedicate his land to the public use [are] unmistakable in their purpose and decisive in their character to have the effect of a dedication” and (2) that the public has accepted the land as dedicated to a public use … .

It remains an open question whether the second prong of the implied dedication doctrine applies to a municipal land owner, but we need not and do not resolve that issue on this appeal because we conclude that the City’s acts are not an unequivocal manifestation of an intent to dedicate the parcels as permanent parkland. With respect to the element of the owner’s intent — the only matter contested in this appeal — if a landowner’s acts are “equivocal, or do not clearly and plainly indicate the intention to permanently abandon the property to the use of the public, they are insufficient to establish a case of dedication” … . * * *

Here, as the Appellate Division noted, several documents created prior to this litigation demonstrate that the City did not manifest an unequivocal intent to dedicate the contested parcels for use as public parks. The permit, memorandum of understanding and lease/license relating to Mercer Playground, LaGuardia Park and LaGuardia Corners Gardens, respectively, show that “any management of the parcels by the [DPR] was understood to be temporary and provisional” … . Thus, those documents’ restrictive terms show that, although the City permitted and encouraged some use of these three parcels for recreational and park-like purposes, it had no intention of permanently giving up control of the property. And, as the Appellate Division observed, “the City’s “refus[al of] various requests to have the streets de-mapped and re-dedicated as parkland” … further indicates that the City has not unequivocally manifested an intent to dedicate the parcels as parkland. Matter of Glick v Harvey, 2015 NY Slip Op 05593, CtApp 6-30-15

 

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Town Board’s Terminating, Without Notice, Plaintiff’s Construction Project Violated Plaintiff’s Right to Substantive Due Process/Town Was Not Entitled to Qualified Immunity

The plaintiff had cleared the way for building on land which included wetlands by obtaining the necessary permits and waivers from the Environmental Protection Agency (EPA) and the Army Corps of Engineers (ACE) when, without notice, the town board passed a resolution rescinding a previously issued sewer tap-in waiver and terminating the construction project. Among other theories, plaintiff sued under 42 USC 1983 (deprivation of property without due process of law) and won. On appeal the due process violation verdict was upheld. The Fourth Department explained the criteria for the due process cause of action and noted that the defendant town was not entitled to qualified immunity because the town board’s actions violated plaintiff’s constitutional rights:

… [W]e note that the Court of Appeals has set forth a two-part test for substantive due process violations: “[f]irst, [a plaintiff] must establish a cognizable property interest, meaning a vested property interest, or more than a mere expectation or hope to retain the permit and continue their improvements; they must show that pursuant to State or local law, they had a legitimate claim of entitlement to continue construction’ . . . Second, [a plaintiff] must show that the governmental action was wholly without legal justification” … . Under the first prong, “a legitimate claim of entitlement to a permit can exist only where there is either a certainty or a very strong likelihood’ that an application for approval would have been granted” … . “Where an issuing authority has discretion in approving or denying a permit, a clear entitlement can exist only when that discretion is so narrowly circumscribed that approval of a proper application is virtually assured’ “… . * * *

We reject defendant’s contention that the state constitutional claims should be dismissed because defendant is entitled to qualified immunity. ” A government official is entitled to qualified immunity provided his or her conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known’ ” … . Defendant failed to establish that it was objectively reasonable for the Town Board to believe that its conduct in withdrawing the sewer tap-in waiver request on … was appropriate … . Instead, the evidence established that the Town Board members acted without knowing the history of the project and acted knowing that only the Planning Board had to take action, i.e., to give site plan approval for the property. Despite the existence of plaintiff’s constitutionally protected property interest in the … tap-in waiver request, the Town Board acted … to withdraw that waiver request, which was a violation of plaintiff’s constitutional rights. As such, defendant is not entitled to qualified immunity. Acquest Wehrle, LLC v Town of Amherst, 2015 NY Slip Op 05346, 4th Dept 6-19-15

 

Dry-Cleaning Chemical, PERC, Is Not “Petroleum” Within the Meaning of the Navigation Law—Plaintiff’s Suit for Clean-Up of PERC Under the Navigation Law Properly Dismissed

The Third Department determined the Navigation Law did not confer upon plaintiff a private right of action to sue for clean-up of PERC, a chemical used in dry cleaning.  Plaintiff is the owner of a shopping plaza and sued the estate of the owner a of dry cleaning business that was located in the plaza after PERC was found in the soil. The Navigation Law provides a private right of action to sue for the clean-up of “petroleum.” Although PERC is derived from petroleum, the court held PERC does not constitute petroleum within the meaning of the Navigation Law:

Essentially, plaintiff argues that this finding that PERC is petroleum derived is sufficient to support imposition of liability under the Navigation Law. This would constitute a novel expansion of the law; plaintiff does not cite to, nor can we find, any case in which PERC has been deemed to constitute petroleum under the Navigation Law. At least two other courts have come to the opposite conclusion, finding that PERC does not constitute petroleum under the Navigation Law … . As defendant argues, the vast and diverse range of products and substances derived from petroleum — many of which pose none of the same dangers as petroleum itself — would make a per se rule imposing liability for the discharge of any petroleum-derived substance unworkable. Accordingly, we find no error in Supreme Court’s determination that PERC is not petroleum as defined under Navigation Law article 12 … . Fairview Plaza, Inc. v Estate of Peter J. Rigos, 2015 NY Slip Op 04901, 3rd Dept 6-11-15

 

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City Was Not Required to Consider the Petitioners’ Preferred Scenario for Development—City Was Required Only to Consider the “No Action” Alternative

The First Department determined the city (NYC) took the requisite “hard look” at a development project and provided a “reasoned elaboration” of the basis for its approval of the project. The court noted that, although the City Environmental Quality Review (CEQR) requires that the Final Environmental Impact Statement (FEIS) include an analysis of a “No Action” alternative (an analysis based on the assumption the project will not be constructed), the CEQR does not require the FEIS to consider the petitioners’ preferred alternative development scenario. Matter of Residents for Reasonable Dev. v City of New York, 2015 NY Slip Op 04560, 1st Dept 5-28-15

 

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