SEQRA Settlements — Courts Are Becoming Vigilant

September 23, 1998

Local governments have the statutory right to settle lawsuits that have been filed against them./1 Indeed, well-settled public policy favors settlement agreements./2
Earlier this year, however, a State Supreme Court Justice in Kings County annul led a consent order that had put an end to more than ten years of litigation under the State Environmental Quality Review Act (SEQRA)./3 In its decision in Matter of Doremus v. Town of Oyster Bay,/4 the court declared that its role in considering such a settlement was one of “parens patriae,” similar to a court’s statutory obligations in considering the proposed settlement of an action begun by on behalf of an infant, incompetent, or conservatee or the proposed settlement of a wrongful death cause of action.

The Doremus decision demonstrates that, when considering settlement of a SEQRA suit, a court may not act as simply a “rubber stamp.” Instead, the ruling sends a strong message to governments and developers that, in a case involving the environment, a court may take on a significant role in the settlement process as a “guardian of the environment.”

Rezoning Request

The Doremus case involved an 8 1.1 acre undeveloped parcel of real property located in the Town of Oyster Bay, in Nassau County, that the Tilles Investment Company acquired in 1981, The property is above two underground aquifers in a “special groundwater protection area,” which is defined by the Environmental Conservation Law as a “recharge watershed area . . . which is particularly important for maintenance of large volumes of high quality groundwater for long periods of time.”/5

In December 1984, after its initial request for rezoning had been turned down, Tilles asked the town board to rezone the property so that it could construct 218 condominium units and 124 single-family detached homes on lots measuring a minimum of 7,000 square feet. Following the town’s directive, Tilles filed a Draft Environmental Impact Statement (DEIS) in December 1984, which it revised in March 1985.

The town held a number of public hearings and Tilles filed a Final Environmental Impact Statement (FEIS) in October 1985. That document identified relevant environmental issues associated with the proposed development, including the impact on groundwater, open space, traffic, and schools. In February 1986, the Nassau County Planning Commission recommended disapproval of Tilles’ rezoning request. It found among other things that the uniqueness of the property as a major deep aquifer recharge zone required that it be developed at low density to insure a source of uncontaminated water. The following month, the town board concluded that the project posed serious environmental concerns and stated that “the action to be carried out or approved is not one which minimizes or avoids adverse environmental effects to the maximum extent practicable.” The town board also determined that “proposed mitigative measures were inadequate.” Accordingly, it rejected the Tilles application.

In July 1986, Tilles filed a lawsuit against the town, asserting that its refusal to rezone the site was in violation of the town’s comprehensive plan. After years of discovery and extensive motion practice and after engaging in settlement negotiations, the parties entered into a consent order that was signed by the court in November 1996.

The Doremus ruling sends a strong message to governments and developers that, in a case involving the environment, a court may take on a significant role in the settlement process as a “guardian of the environment.

By the terms of this stipulation, the parties agreed that the FEIS contained “sufficient information to support a conclusion that the potential environmental impacts of the Application and development in accordance therewith is acceptable environmentally and that any potential environmental impacts an be satisfactorily mitigated.” The settlement provided a rezoning of the Tilles property to allow a subdivision creating 200 estate lots averaging 8,000 square feet in size and 70 villa lots averaging 6,000 square feet in size. With 270 units to be constructed, the overall density would be 3.33 units per acre.

Four retention ponds and certain unspecified amenities for use by community residents would be created. Approximately 28 acres of the site would be occupied by impervious areas, 5.5 acres by water surface area, 41.2 acres by landscaping, and 5.8 acres by meadow or brush land and forested areas. No Supplementary Environmental Impact Statement was prepared prior to, or even after, the settlement.

Settlement Challenged

Less than a month after the court approved the settlement,/6 some residents of the area filed an Article 78 proceeding challenging the settlement and seeking to have the consent order and rezoning Annulled on the ground that they violated SEQRA./7 The town responded that the issues raised by the residents had been studied under the 1985 DEIS and FEIS, that no significant change had occurred to warrant the preparation of a supplemental Environmental Impact Statement, and that its decision to settle the litigation “was wholly justified on the basis of the previous studies.”

The court determined that in deciding to settle the action and rezone the property, the town had not considered the relevant environmental impacts, facts, and conclusions disclosed in the FEIS; weighed and balanced relevant environmental impacts with social, economic, and other considerations; or provided a rationale for its decision./8 Moreover, the court said, given the fact that the town had “consistently and steadfastly,” over a ten-year period, refused to downzone the property due to its finding that significant negative environmental impacts would result from proposed development as disclosed by the DEIS and FEIS, it was incumbent upon the town, “at the very least, to consider and evaluate all of the previously identified significant environmental impacts and mitigation measures to determine whether the new project could be completed in a manner consistent with SEQRA … as well as to explain [the] policy reversal.”

The Doremus court established a high standard concerning the functions of a court in connection with the settlement of a SEQRA action.

The court added that the changes made between the 1985 plan and the plan approved in the settlement order were “unstudied” and their impact “unknown.” Indeed, the court stated, the differences between the rezoning as approved and the rezoning as requested and studied in the 1985 DEIS and FEIS were “radical.”

Yet, the court declared, the town had approved the changes “without adequate explanation or consideration,” and said that the record had failed to reveal any evidence that the town had taken a “hard look” at the revisions and made findings supported by a rational basis following its history of rejecting past proposals. It found “unconvincing” the town’s assertion that the DEIS adequately had addressed the rezoning as approved.

Significantly, the Doremus ruling is more than just another “hard look” decision./9 The court emphasized that it had to be provided with information to make a determination that the settlement was “just, reasonable and to the interest of the town.”/10 It concluded that the settlement – more particularly, the town’s decision to approve the settlement and its failure to act in accord with SEQRA – circumvented SEQRA’s “strict requirements.”

High Standard

The Doremus court established a high standard concerning the functions of a court in connection with the settlement of a SEQRA action. This is not a situation in which litigants, acting at arms’ length, can chart their way through the settlement of a SEQRA suit without significant court intrusion. An environmental impact statement may be necessary because there is a silent non-represented party involved – the environmental resource that may be affected. The court will vigilantly act on its behalf to insure proper environmental consideration of the settlement. Perhaps an environmental hearing before the court on the proposed settlement with an opportunity for participation of the parties, the public, and the court itself will satisfy Doremus. Alternatively, a local government seeking to settle a SEQRA action may want to hold its own public hearing, at which time the environmental issues may be explored. Once the settlement is finalized, the parties would submit the record of the environmental hearing to the court for review, before its approval of the stipulation. One thing is clear. Future settlements of SEQRA cases should be watched closely to determine the extent to which other courts will seek to involve themselves in the process and follow Doremus or whether Doremus is an extreme case requiring very careful review.

NOTES:

1. See, e.g., N.Y. TownLaw §68(l)(a).

2. See, e.g., Denberg v. ParkerChapin Flattau & Klimpl, 82N.Y.2d 375; Curran v. E.E. Cruz & Co., Inc., 234 A.D.2d 254.

3. ECL Article 8.

4. Sup. Ct. Kings Co., N.Y.L.J., Jan. 28, 1998 at 28.

5. See ECL §55-0117(6).

6. There is a four month statute of limitations to allege SEQRA violations. See, e.g., Save the Pine Bush v. Albany, 7 N.Y.2d 193.

7. UnderNYCCR§617.5(c)(37), as an “action . . . of any court,” a consent judgment may be exempt from SEQRA depending on the factual setting. See Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855 (2d Cir. 1988); Lucas v. Planning Board of Town of LaGrange, 1998 U.S. Dist. Lexis 7538 (S.D.N.Y. May 19,1998). The Doremus court noted that SEQRA is “silent regarding the settlement of nonenforcement proceedings by consent decrees” and determined that “the [t]own’s settlement with Tilles is, in fact, subject to SEQRA.”

8. See 6 NYCRR §617.11(d).

9. For a detailed discussion of SEQRA’s “hard look” requirement, see John M. Armentano, “A ‘Hard Look’ and SEQRA,” NYLJ, Jan. 5, 1994 at 5; see also Akpan v. Koch, 75 N.Y.2d 56 1; H.O.M.E. S. v. N.Y. Urban Devel. Corp., 69 A.D.2d 222.

1O. See Town Law §68(2).

John M. Armentano, a partner with the Long Island law firm of Farrell Fritz, P.C., represents local governments and developers in zoning, land use, and environmental matters, including litigation.

This article is reprinted with permission from the September 23, 1998 edition of the New York Law Journal.

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