Nilsson v. Department of Environmental Protection, 8 N.Y.3d 398 (2007)

A New York City Department of Environmental Protection (DEP) variance decision is arbitrary and capricious if it demands mitigation measures outside its regulatory authority, but DEP can reasonably request information about contiguous property holdings when assessing hardship.

Summary

Nilsson sought a variance from regulations limiting fill for a subsurface sewage treatment system (SSTS) on his property within the NYC Watershed. DEP denied the variance, citing inadequate mitigation of stormwater runoff from the proposed residence and Nilsson’s failure to provide information on other real estate holdings. The New York Court of Appeals held that DEP acted improperly by requiring mitigation measures for stormwater runoff because these measures were outside the scope of its regulatory authority. However, the Court also stated that DEP could reasonably request information about Nilsson’s contiguous property holdings. The case was remitted for reconsideration of the hardship claim.

Facts

Nilsson applied for a permit to build an SSTS on vacant land in Putnam County, within the NYC Watershed. The application was denied because it exceeded fill limits set by DEP-PCDOH standards. Nilsson sought a variance, arguing compliance was impossible due to shallow soil and that denial would cause substantial hardship. DEP requested mitigation measures for potential contamination and stormwater runoff, also seeking information about Nilsson’s other property holdings. Nilsson proposed mitigation for the SSTS itself but refused to provide information on other real estate holdings. DEP denied the variance citing inadequate stormwater mitigation and lack of information to substantiate hardship.

Procedural History

Nilsson initiated a CPLR article 78 proceeding to overturn DEP’s decision. The Supreme Court denied the petition, finding DEP’s requirements rational and Nilsson’s hardship claim unsubstantiated. The Appellate Division reversed, holding that DEP exceeded its authority by considering stormwater runoff issues and that noncontiguous real estate holdings were irrelevant. The Court directed DEP to grant the variance. The Court of Appeals granted DEP leave to appeal.

Issue(s)

1. Whether DEP acted within its authority by requiring mitigation of stormwater runoff as a condition for granting a variance from fill requirements for an SSTS.

2. Whether DEP properly denied the variance application based on Nilsson’s failure to provide information about his other real estate holdings.

Holding

1. No, because DEP cannot extend its jurisdiction to otherwise unregulated sources of degradation or contamination of the New York City water supply, simply because they might potentially arise from the granting of a variance.

2. No, because the request for information regarding real estate holdings was too broad; however, DEP may reasonably request information about contiguous holdings.

Court’s Reasoning

The Court of Appeals found that DEP properly required Nilsson to propose measures to reduce potential contamination related to the excessive fill, pursuant to 15 RCNY 18-61 (a) (1) (iii), which requires an applicant seeking a variance from the requirements of the Watershed Regulations to “[demonstrate that the activity as proposed includes adequate mitigation measures to avoid contamination to or degradation of the water supply which are at least as protective of the water supply as the standards for regulated activities set forth in these rules and regulations.” However, DEP abused its discretion by demanding mitigation of stormwater runoff, as these regulations (15 RCNY 18-39) did not apply to Nilsson’s property. The Court reasoned that DEP cannot expand its regulatory reach simply because a variance might allow for potentially unregulated pollution sources, stating that, “DEP…cannot extend its jurisdiction to otherwise unregulated sources of degradation or contamination of the New York City water supply, simply because they might potentially arise from the granting of a variance.” The Court also held that the request for information about real estate holdings “in the immediate vicinity” was overly broad. While the regulations require a showing of “substantial hardship due to site conditions or limitations” (15 RCNY 18-61 [a] [1] [iv]), this does not mandate evidence of financial loss like a zoning use variance. DEP can, however, request information about contiguous property holdings, as combining lots may minimize hardship. The Court remitted the case to DEP for reconsideration of Nilsson’s hardship claim, given his failure to provide information about contiguous holdings.