E.F.S. Ventures Corp. v. Foster

OPINION OF THE COURT Per Curiam. The petitioner, E.F.S. Ventures Corp., is the owner of approximately 5.2 acres of real property located on Old Montauk Highway in the Town of East Hampton. This property had been improved by a small motel and surrounding cottages which, collectively, were known as the Beachcomber. Shortly after purchasing the property, the petitioner submitted a site plan application to the respondent Planning Board of the Town of East Hampton which called for the improvement and — 31 — upgrading of the existing motel units as well as the construction of certain additional units. The foregoing application was considered by the Planning Board and was ultimately approved, on September 29, 1982, without the benefit of any environmental impact study.* On January 26, 1983, the petitioner submitted a further application wherein it sought to modify the site plan to include, inter alia, the erection of an additional building. The Planning Board, in response, directed that an environmental assessment form be prepared. This form was ultimately prepared, in part, by the petitioner and, in part, by an independent consultant retained by the Planning Board. After evaluating the information contained in this form, the Board, pursuant to the State Environmental Quality Review Act (hereinafter SEQRA; ECL 8-0101 et seq.) issued a formal "negative declaration”, based on its determination that the amendment would result in a "potential overall small to moderate impact on the environment” which could effectively be mitigated by the measures delineated in the environmental assessment form. Accordingly, on March 17, 1983, a resolution adopting the petitioner’s modified site plan was filed with the Town Clerk and construction commenced shortly thereafter. . Approximately one month later, on or about April 14, 1983, certain local residents who opposed construction of the project initiated a proceeding pursuant to CPLR article 78, in an effort to set aside the Planning Board’s resolution which granted the petitioner permission to proceed with the construction. These residents alleged in their petition that the Board’s resolution was of questionable validity, primarily because the requirements of SEQRA had not been complied with nor satisfied. A preliminary injunction to halt all construction during the pendency of the CPLR article 78 challenge was denied, and the petitioner continued to work on the construction project in accordance with the specifications contained in the approved modified site plan. The aggrieved local residents were ultimately successful in their bid to set aside the Planning Board’s determination and, on October 12, 1983, the matter was remitted to the Board for a de novo examination of the modified site plan in order to — 32 — ensure compliance with the requirements of SEQRA. The court, additionally, enjoined the issuance of certificates of occupancy for 64 units which had already been constructed or renovated under previous approvals. The petitioner, in the interim, appealed to this court. While that appeal was pending, however, the Planning Board, pursuant to Special Term’s judgment, was in the process of conducting a de novo examination of the modified site plan in order to ascertain the environmental ramifications of the project. On April 15, 1985, this court modified the judgment of Special Term, to the extent of vacating the prohibition against the issuance of certificates of occupancy with respect to the 64 constructed units. We did so on the ground that this relief was precluded due to the passage of the four-month Statute of Limitations. The judgment, in all other respects, was affirmed. This court stated that "the planning board’s initial finding of nonsignificance did not take into account the designated environmental criteria, as mandated by 6 NYCRR 617.11 (a) (1)-(11). The subsequent preparation of environmental assessment forms does not vitiate the planning board’s failure to literally comply with the statutory mandate” (Matter of Nielsen v Planning Bd., 110 AD2d 767, 768; emphasis supplied). Thus, we concluded that the Planning Board’s determination was properly annulled by Special Term and that a de novo examination, pursuant to the precepts of SEQRA, was required (see, Matter of Nielsen v Planning Bd., supra). Meanwhile, in accordance with Special Term’s directives mandating a de novo review of SEQRA considerations, a decision which, as noted, was held by this court to be legally correct, a draft and then a final environmental impact statement were prepared and submitted. These statements disclosed the existence of numerous major adverse impacts upon the environment which would result from the construction as proposed, including drainage problems, disruption of a wildlife corridor, limited site distance of access roadways, and insufficient interior traffic circulation for emergency vehicles. Following a public hearing, the Planning Board, possessed of the foregoing information, voted to grant site plan approval subject to conditions requiring the petitioner to implement various measures to minimize the adverse environmental impacts of the construction. The most significant of these measures called for the destruction of 10 motel units, located in three separate buildings. The Planning Board’s resolution further required, inter alia, that landscape plans be modified and that — 33 — certain roadways be relocated. Once notified of the Planning Board’s determination requiring the destruction of 10 motel units, which were already constructed, the petitioner submitted various alternate proposals which, it maintained, would effectively alleviate the adverse environmental impacts referred to by the Board, but which would also avoid the burdensome and costly destruction of 10 completed units. The Board, thereafter, considered all of the proposals and ultimately adhered to its determination that the destruction of the motel units would be the most efficacious means of minimizing adverse environmental impacts. On October 4, 1984, the petitioner commenced proceeding No. 1 in an effort to set aside the Planning Board’s determination. The petitioner claimed, in essence, that the modifications and conditions imposed by the Board were arbitrary and capricious and that it was legally entitled to retain all 92 existing units situated on the property. Special Term, however, concluded that the Planning Board had arrived at an acceptable balance between the conflicting interests, that the Board’s determination was based upon substantial evidence, and that the petitioner by "proceeding full tilt” with construction during the pendency of a proceeding pursuant to CPLR article 78, had completed the project "at its peril”. Special Term, accordingly, dismissed proceeding No. 1 on the merits. On or about May 15, 1985, the petitioner initiated a second proceeding pursuant to CPLR article 78 (proceeding No. 2) seeking to compel the building inspector to issue 64 permanent certificates of occupancy for units constructed pursuant to earlier site plan approvals. The building inspector had previously agreed to issue 58 temporary certificates of occupancy but refused to issue the remaining 6 certificates, inasmuch as these certificates referred to 6 of the 10 units which were ordered to be destroyed. In addition, the building inspector had refused to issue any permanent certificates of occupancy until the petitioner fully complied with all of the conditions and modifications required by the Planning Board. Special Term, on August 5, 1985, dismissed proceeding No. 2, finding no legal predicate upon which to justify a judgment compelling the building inspector to issue the certificates of occupancy. The petitioner now appeals from each of the judgments dismissing its proceedings. The central question to be resolved on these appeals is whether the Planning Board of the Town of East Hampton — 34 — may, under the aegis of SEQRA, impose conditions upon or require modifications to a construction project which had already been completed in reliance upon previous site plan approvals. Under the circumstances of this case, this question must be answered in the affirmative. SEQRA and its implementing regulations require agencies to "act and choose alternatives which, consistent with social, economic and other essential considerations, to the maximum extent practicable, minimize or avoid adverse environmental effects” (ECL 8-0109 [1]). Accordingly, "[a]n agency may not approve an action unless it makes 'an explicit finding that the requirements of [SEQRA] have been met and that consistent with social, economic and other essential considerations, to the maximum extent practicable, adverse environmental effects revealed in the environmental impact statement process will be minimized or avoided’ (ECL 8-0109 [8]; see, 6 NYCRR 617.9 [c] [2] [i])’ ” (see, Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 416; emphasis added). It is readily apparent, from the express language utilized in the regulatory scheme, as well as from pertinent decisional authority, that literal compliance with the review procedures set forth in SEQRA is required, and that even substantial compliance is insufficient (see, e.g., Glen Head—Glenwood Landing Civic Council v Town of Oyster Bay, 88 AD2d 484; Matter of Niagara Recycling v Town Bd., 83 AD2d 335, affd 56 NY2d 859; Matter of Rye Town/King Civic Assn. v Town of Rye, 82 AD2d 474, lv dismissed 56 NY2d 985, rearg denied 57 NY2d 775). Notwithstanding its obligation to strictly comply with prescribed procedures, the Planning Board, as we noted in the prior appeal, never considered the environmental ramifications of the proposed construction when it initially granted site plan approvals to the petitioner and, following a cursory examination, apparently rendered an erroneous determination of nonsignificance when it passed upon petitioner’s application to modify the site plan. For this reason, both Special Term and this court ordered a de novo examination of the environmental impacts and declared, in effect, that the prior approvals were invalid. The petitioner, nevertheless, chose to proceed with and virtually complete construction, despite the fact that the validity of the approvals upon which it relied were actively being challenged in a court of law. Although a preliminary injunction to halt construction during the pendency of the challenge pursuant to CPLR article 78 had been denied, this denial was not tantamount to an adjudication that the — 35 — approvals were valid. The petitioner simply cannot be said to have acquired immutable rights with respect to the construction project merely because it made construction expenditures in reliance upon potentially invalid approvals. Nor can the petitioner fairly claim that it assumed no risk when it continued with the construction project before the pending litigation was finally resolved. Although our dissenting colleague suggests that the petitioner, armed with a resolution approving its original and modified site plan proposals, acted in good faith when it proceeded with the construction, and that the Planning Board should, therefore, be equitably estopped from imposing mitigation measures as a condition of approval of the modified site plan, we cannot agree. It is firmly established in this State, that the defense of estoppel may not be invoked against a governmental entity where that entity is acting in its governmental capacity (see, Matter of Hamptons Hosp. & Med. Center v Moore, 52 NY2d 88; Hartford Ins. Group v Town of N. Hempstead, 118 AD2d 542; Matter of Milano v New York State Dept, of Health, 108 AD2d 916; New York State Inspection, Sec. & Law Enforcement Employees v Cuomo, 103 AD2d 312, affd 64 NY2d 233). Nor is estoppel available for the purpose of ratifying an administrative error (see, Morley v Arricale, 66 NY2d 665). These rules are not only conceptual, but pragmatic, for it would be counterproductive and ultimately harmful to the public to prevent an agency from fulfilling its legislatively ordained public function. It would be equally detrimental to bind an agency to a prior determination which was made in direct contravention of a statute enacted for the benefit of the public. While we are not insensitive to the petitioner’s plight, we decline to blaze new trails by adopting a position which, in the final analysis, would preclude a governmental agency from discharging its statutory obligations. The salutary objectives underlying the enactment of SEQRA would be thwarted were we to estop a municipal entity from enforcing its mandate. We know of no New York case, nor has any been identified by our dissenting colleague, where an equitable estoppel defense has been successfully invoked to undermine legislation specifically designed for the protection of the public. Rather, it appears that "estoppel can never be used to prevent the State from enforcing its laws or * * * an agency from carrying out its duties” (see, Matter of City of New York v New York State Dept. of Envtl. Conservation, 89 AD2d 274, 276). — 36 — Our decision to reject the defense of estoppel herein is further reinforced by the fact that the petitioner continued with the construction project despite its actual knowledge of pending litigation affirmatively challenging the propriety of the Planning Board’s resolution. We therefore find, as did Special Term, that the petitioner proceeded at its own peril by completing construction in the midst of unresolved litigation (see, Matter of Alpert v Town of Carmel Zoning Bd. of Appeal, 89 AD2d 853), and that the hardship of which the petitioner now complains is attributable to its conscious decision to proceed, and, therefore, constitutes a self-created hardship. While we recognize that the courts are generally reluctant to grant relief which would effectively prohibit a fait accompli (see, Town of Oyster Bay v New York Tel. Co., 75 AD2d 598), this rule should not be extended to a situation where, as here, the "accomplishment” of the very "fact” in issue appears to be the product of the petitioner’s efforts to complete the project prior to the rendition of a potentially unfavorable judicial determination regarding the validity of the March 17, 1983, resolution (see, Shumaker v Town of Cortlandt, 124 AD2d 129). We further conclude that the petitioner’s purported reliance upon invalid site plan approvals may not be utilized as justification for circumventing the requirements of SEQRA. Nor does this reliance operate to estop the agency, in the instant circumstances, from thereafter imposing new conditions or modifications to minimize significant adverse environmental impacts. Any holding to the contrary would effectively render meaningless this court’s prior decision which specifically directed the Planning Board to conduct a de novo examination of SEQRA considerations, and implicitly, required the Planning Board to render a determination which, in its view, would best effectuate the important objectives of that statute. Simply stated, the Planning Board in the instant case merely did what it was instructed by this court to do. The Legislature, in enacting SEQRA, has devised a statutory scheme whereby lead agencies are required "to promote efforts which will prevent or eliminate damage to the environment and enhance human and community resources” (ECL 8-0101). SEQRA is a substantive rather than procedural act (see, Matter of Town of Henrietta v Department of Envtl. Conservation, 76 AD2d 215), and the provisions contained therein are intended to minimize, to the greatest degree possible, the adverse environmental consequences of any proposed construction project. While it would indeed be a "manifest injustice” — 37 — as well as a deprivation of due process to require substantial building alterations on the basis of a law which was not in force at the time of the commencement of the construction project (see, Matter of Bexson v Board of Zoning & Appeals, 28 AD2d 848, affd 21 NY2d 961), we believe that it would be inappropriate as well as legally erroneous to foreclose the lead agency at bar from enforcing the mandate of SEQRA merely because this agency initially failed to literally comply with the statute or because the petitioner elected to complete the project, notwithstanding the existence of pending litigation. "Requiring strict compliance by agencies with SEQRA’s * * * requirements is more than a hollow procedural nicety” (see, Matter of Schenectady Chems. v Flacke, 83 AD2d 460, 463). Accordingly, enforcement of the provisions of SEQRA should neither be suspended nor dispensed with; rather, it is the Planning Board’s initial approvals which should be set aside (see, Chinese Staff & Workers Assn. v City of New York, 68 NY2d 359; Matter of Tri-County Taxpayers Assn. v Town Bd., 55 NY2d 41). Therefore, the imposition by the Board of mitigation measures, including the destruction of 10 completed units, is a necessary, albeit unfortunate, consequence of the enforcement of a remedial statute previously misapplied or disregarded (see, Shepard v Village of Skaneateles, 300 NY 115; Altschul v Ludwig, 216 NY 459; 154 E. Park Ave. Corp. v City of Long Beach, 76 Misc 2d 445, mod on other grounds 49 AD2d 949, affd 52 NY2d 991, cert denied 454 US 858). Having determined that the Planning Board was legally obligated to review the environmental impacts of the construction project in accordance with the precepts embodied in SEQRA, and that the prior determinations of the Board, made in the absence of full compliance with SEQRA, were, in effect, null and void (see, Chinese Staff & Workers Assn. v City of New York, supra; Matter of Tri-County Taxpayers Assn. v Town Bd., supra), we turn now to the question of whether the remedial scheme promulgated by the Planning Board was arbitrary and capricious. It is firmly established that the standard of judicial review for SEQRA challenges is quite limited. A court may overturn an agency’s determination only when it is "in violation of lawful procedure * * * affected by an error of law or * * * arbitrary and capricious or an abuse of discretion” (see, CPLR 7803 [3]; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 416, supra; Horn v International Business Machs. Corp., 110 AD2d 87, lv denied 67 NY2d 602). If the — 38 — record establishes that the responsible agency has taken a "hard look” at the relevant areas of environmental concern, and has made a reasoned judgment, the agency’s determination will not be disturbed (see, Aldrich v Pattison, 107 AD2d 258). It should be noted, moreover, that a reviewing court does not, in the context of a proceeding pursuant to CPLR article 78, have the authority to substitute its own discretion for that of the lead agency. The Planning Board at bar considered the environmental impact statements, and the opinions of engineers, the local fire department, neighboring residents, and the petitioner. It additionally reviewed the petitioner’s alternate proposals to mitigate adverse environmental impacts, and the financial ramifications to the petitioner and, after evaluating these considerations, arrived at its determination. As Special Term aptly noted in its decision, the resolution which the petitioner now challenges is the product of a "careful analysis of the environmental problems presented by this motel development”. It is readily apparent, and even the petitioner does not dispute, that the Planning Board took a "hard look” at the relevant areas of environmental concern (see, Aldrich v Patti-son, supra, at 265-266; Horn v International Business Machs. Corp., supra). Although many of the concerns identified by the Planning Board could, arguably, have been mitigated by adopting the off-site alternative measures proposed by the petitioner, "it is not the role of the courts to weigh the desirability of any action or choose among alternatives, but to assure that the agency itself has satisfied SEQRA, procedurally and substantively” (see, Matter of Jackson v New York State Urban Dev. Corp., supra, at 416). Nor should the court " 'interject itself within the area of discretion of the executive as to the choice of the action to be taken’ ” (see, Coalition Against Lincoln W. v City of New York, 94 AD2d 483, 492, affd 60 NY2d 805, rearg denied 61 NY2d 670). On the basis of the record before us, we are compelled to conclude that the Planning Board’s determination was not arbitrary and capricious, and must, therefore, be sustained. Although we are constrained to uphold the determination of the Planning Board, based upon the limited scope of our review powers, we take this opportunity to stress the importance of early consideration of the environmental impacts of a proposed construction project (see, Matter of Sun Beach Real Estate Dev. Corp. v Anderson, 98 AD2d 367, affd 62 NY2d 965; Devitt v Heimbach, 89 AD2d 920, affd 58 NY2d 925). Indeed, — 39 — had the Planning Board properly fulfilled its obligation to evaluate SEQRA considerations when first presented with the construction plans, the consequences of this litigation could have been avoided. Contrary to the petitioner’s assertions, however, the fact that the Planning Board ultimately required the destruction of 10 completed units, some of which had been fully constructed prior to the initiation of litigation, does not mandate reversal. The Planning Board was required, by SEQRA, to act affirmatively to lessen the adverse environmental effects of the construction (see, ECL 8-0109 [1], [8]). The Board’s obligation to impose those conditions which it deemed necessary to minimize or avoid all adverse environmental impacts extended to the entire project and was not limited to the Board’s March 17, 1983 resolution which erroneously approved the modified site plan (see, Matter of Town of Henrietta v Department of Envtl. Conservation, 76 AD2d 215, 223, supra). Indeed, although the petitioner now claims that the Planning Board should be precluded from requiring any modification of the units which were renovated and/or constructed pursuant to the resolution approving the original site plan, even our learned dissenting colleague agrees that the petitioner, by seeking approval of the modified site plan, exposed the entire project to de novo review and that the Planning Board was, therefore, legally obligated to assess the environmental impact of the project as a whole and not merely the impact of the units referred to in the modified plan. Clearly, if the petitioner had proceeded with the unchallenged site plan approved in September of 1982 and had not sought to expand the project, the dilemma which it now faces would have been avoided. The fact, nevertheless, remains that the petitioner, by choice, submitted the modified site plan for approval and as a result should not be heard to complain of the consequences of that decision. Furthermore, although the dissent suggests that "noncomprehensive consideration of a project divisible into smaller parts * * * would provide a clear loophole in SEQRA”, it should be emphasized that the statute is a product of legislative efforts to "save the environment and preserve it for future generations” (see, Matter of Sun Beach Real Estate Dev. Corp. v Anderson, supra, at 375). Therefore, the concern of the courts should be to fully enforce the statute rather than create loopholes. — 40 — We note, moreover, that the recent case of Golden v Metropolitan Transp. Auth. (126 AD2d 128), is not inconsistent with our decision herein. Although this court, in Golden, recognized that "once a violation of SEQRA has been shown, the proper remedy is to annul whatever agency determinations may have been made in the absence of full compliance with SEQRA (see, Chinese Staff & Workers Assn. v City of New York, 68 NY2d 359; Matter of Tri-County Taxpayers Assn. v Town Bd., 55 NY2d 41)” (Golden v Metropolitan Tr. Auth., supra, at 132), we refused to read the foregoing cases as authority for the proposition that "any actions taken pursuant to an invalid agency determination must be 'undone’ ” (supra, at 132, or that the remedy for an apparent SEQRA violation is to restore conditions to the way they existed before the agency action was taken. The matter at bar does not involve a determination requiring that conditions be restored to the status quo ante. To the contrary, the Planning Board, in the instant case merely ordered the petitioner to implement certain modifications so as to minimize the adverse environmental impacts of the construction project. It is also significant, for purposes of distinguishing the two cases, that Golden did not involve any determination that the action undertaken would be detrimental to the environment, as is the situation in the case under review. Finally, the issue confronted in Golden was whether the issuance of injunctive relief was proper. In the present case, the issue before us is simply whether the agency’s determination was arbitrary and capricious. Therefore, that determination should not be disturbed by a court of law. The allegedly less onerous alternative means available by which adverse environmental impacts allegedly could be mitigated were fully considered by the Planning Board and rejected by it. Finally, we find that Special Term did not err in refusing to compel the building inspector to issue permanent certificates of occupancy. Although this court previously vacated an injunction prohibiting the issuance of certificates pursuant to the four-month Statute of Limitations, our prior order did not affirmatively direct the issuance of these certificates. Moreover, in light of the fact that the Board’s determination has been confirmed, and the building inspector must further ascertain whether the petitioner has complied with applicable laws and ordinances, it would be premature and improper to order the issuance of certificates at this juncture. — 41 — Accordingly, the judgments appealed from should be affirmed. Footnotes [*] By resolution dated December 1, 1982, the Planning Board of the Town of East Hampton approved the petitioner’s application to amend the original site plan, in minor respects. This resolution was similarly adopted in the absence of any environmental impact study.