Gazza v. New York State Dept. of Environmental Conservation

• Decision Date: 18 February 1997
• Citation: 657 N.Y.S.2d 555,89 N.Y.2d 603,679 N.E.2d 1035
• Parties: , 679 N.E.2d 1035, 28 Envtl. L. Rep. 20,053 In the Matter of Joseph F. GAZZA, Appellant, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 555

657 N.Y.S.2d 555

89 N.Y.2d 603, 679 N.E.2d 1035, 28

Envtl. L. Rep. 20,053

In the Matter of Joseph F. GAZZA, Appellant, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, Respondent.

Court of Appeals of New York.

Feb. 18, 1997.

Esseks, Hefter & Angel, Riverhead (Steven R. Angel and John M. Wagner, of counsel), for appellant.

Dennis C. Vacco, Attorney-General, New York City (Gregory J. Nolan, Barbara Gott Billet, Peter H. Schiff, John J. Sipos and Michael Belohlavek, of counsel), for respondent.

Bracken & Margolin, Islandia (John P. Bracken, of counsel), James S. Burling and Stephen E. Abraham, of the California Bar, admitted pro hac vice, for Pacific Legal Foundation, amicus curiae.

John A. Humbach, White Plains, for Audubon Council of New York State and others, amici curiae.

Wilmer, Cutler & Pickering (William A. Butler, David A. Westbrook and James F. O'Reilly, of the District of Columbia Bar, admitted pro hac vice, of counsel), and James T.B. Tripp, New York City, for Environmental Defense Fund, amicus curiae.

OPINION OF THE COURT

SMITH, Judge.

The primary issue in this case is whether the denial of a building variance pursuant to environmental regulation effects an unconstitutional taking (U.S. Const. Fifth Amend.; N.Y. Const., art. I, § 7) for which the landowner must be justly compensated. Petitioner argues that the denial of a variance due to legislation enacted to preserve wetlands is a taking despite the fact that the legislation was fully enacted and in force when he purchased the property. We disagree and affirm the dismissal of the petition.

Petitioner purchased property located in a residentially zoned district in the Village of Quogue, Town of Southampton, Suffolk County, for $100,000. Approximately 65% of the 43,500-square-foot parcel had previously been inventoried as tidal wetlands by the New York State Department of Environmental Conservation (DEC). As Supreme Court found, the purchase price reflected the fact that a variance would be required to build a residence on the property due to its incorporating tidal wetlands. Petitioner estimates that, assuming a variance were granted and a residence could be constructed on the property, the parcel would be worth $396,000.

Petitioner applied to the DEC for two setback variances from the requirements of 6 NYCRR 661.6 to enable him to construct a single-family home on the parcel. The first variance request was from the minimum 75-foot setback required between the tidal wetlands boundary and the dwelling. The second variance request was from the 100-foot setback required between the wetlands boundary and the planned septic system.

The matter was heard by an Administrative Law Judge (ALJ) who recommended that the application be denied. Nevertheless, the ALJ suggested the construction of a dock, catwalk, and/or a small parking lot as possible uses for the property. The Hearing Report of the ALJ was adopted as the decision in the matter by the DEC Commissioner.

In concluding that the petitioner had not sustained his burden of showing that the variances would have no adverse impact on the tidal wetlands contained on the property, the DEC concluded:

"The proposed project and all of the many alternatives that were considered require a variance from the development restrictions of 6 NYCRR 661.6. To receive the variance, the Applicant has the burden to show that, among other things, the granting of a variance would not have an undue adverse impact on the present or potential value of the tidal wetland [6 NYCRR 661.11(a) ]. ¹ The record clearly demonstrates that the Applicant has not sustained this burden. The proposed project and any of the alternatives would eliminate or diminish several tidal wetland benefits, in particular, values related to flood control, wildlife habitat, marine food production and silt/organic material absorption. Exacerbating these impacts is the fact that losses would occur in one of the few functioning wetlands remaining in an otherwise developed area."

Moreover, the DEC made findings of fact that the proposed construction of a sanitary system threatened both marine life and humans, that other contaminants threatened the area and that flooding problems would be increased.

Because the property was located in a residentially zoned area, none of the uses suggested by the ALJ and adopted by the DEC were allowable without a variance from the Town's Zoning Board. Rather than apply for such a variance, petitioner filed this action pursuant to ECL 25-0404 and CPLR article 78.

In Supreme Court, petitioner did not contend that the DEC's determination was not supported by substantial evidence. Rather, petitioner argued that the decision of respondent, the DEC, constituted a taking without just compensation of petitioner's real property. ² A hearing was held to determine petitioner's claim.

At the hearing, petitioner's appraiser testified that the value of the property without the wetlands restriction would be $396,000. Respondent's appraiser testified that under the wetlands restrictions, the property was still worth $80,000. There was also testimony from a local resident that in 1991 he offered petitioner $50,000 for the property, an offer that had not been withdrawn.

Supreme Court found that no taking had occurred and dismissed the proceeding. In so holding, the court found that petitioner had failed to demonstrate that his property had "but a bare residue of [its] value" due to the denial of a building permit and the application of the wetlands regulation. (Matter of Gazza v. New York State Dept. of Envtl. Conservation, 159 Misc.2d 591, 593, 605 N.Y.S.2d 642.) The court held:

"The issue is whether petitioner offered sufficient proof to sustain his heavy burden of showing that the property, as restricted, has lost its economic value, or all but a bare residue of it. The answer is no. The whole focus of the testimony of his own real estate expert was that the property was not as valuable as it would be without the regulations. That is not enough, particularly when there was testimony from a real estate expert called by respondent to show the property, as restricted, had a value of approximately $80,000, which was not too much less than what petitioner 'paid' for it ($100,000)." (Id., at 594, 605 N.Y.S.2d 642.)

Supreme Court went on to explicate an alternative basis to deny petitioner relief. Citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798, Supreme Court concluded that because petitioner knew at the time he purchased the property that there were wetlands limitations, petitioner did not own an interest in the property which could be "taken" by the denial of the setback variances. The court noted that because his title was limited by the wetlands regulations, petitioner had no reasonable investment-backed expectation that he could build a residence there.

The Appellate Division affirmed the dismissal of the petition and noted that "[c]entral to this appeal is the fact that at the time he purchased the property, the petitioner knew of the wetland regulations that 'burdened' it" (Matter of Gazza v. New York State Dept. of Envtl. Conservation, 217 A.D.2d 202, 209, 634 N.Y.S.2d 740). Petitioner argued that he was not bound by such knowledge since it was not until the variance was denied that he was made to suffer a regulatory taking. The Appellate Division disagreed and concluded:

"that where, as here, a landowner does not have a reasonable investment-backed expectation that he would be able to build a residence on his parcel, he cannot claim a regulatory taking when his application for a permit to allow the construction of a building is denied" (217 A.D.2d 202, 203, 634 N.Y.S.2d 740, supra ).

In other words, the Appellate Division, citing Lucas v. South Carolina Coastal Council, supra, stated that at the time petitioner purchased this property, he did so knowing that wetlands restrictions were in place. He thus knew that he was purchasing property with limitations on its use. It followed that he took title to the property with restrictions and no compensation was warranted.

Petitioner appeals the determination of his claim that his property has been taken without compensation. He also argues that this Court should review its decision in de St. Aubin v. Flacke, 68 N.Y.2d 66, 76, 505 N.Y.S.2d 859, 496 N.E.2d 879 which stated that a "landowner who claims that land regulation has effected a taking of his property bears the heavy burden of overcoming the presumption of constitutionality that attaches to the regulation and of proving every element of his claim beyond a reasonable doubt." He claims that this burden is so onerous that it denies him the equal protection of the law. ³

In 1973, the Legislature concluded that "tidal wetlands constitute one of the most vital and productive areas of our natural world, and that their protection and preservation are essential." (L. 1973, ch. 790, § 1.) The Legislature also noted its concern that much of the State's tidal wetlands had already been irreparably destroyed or despoiled and the remaining wetlands were in imminent danger of the same fate (id.). Pursuant to these findings, the Legislature enacted the Tidal Wetlands Act and struck a balance between ecological and economic considerations by preserving and protecting tidal wetlands while permitting reasonable economic use and development (L. 1973, ch. 790; cf., Spears v. Berle, 48 N.Y.2d 254, 260, 422 N.Y.S.2d 636, 397 N.E.2d 1304 [discussing policy of Freshwater Wetlands Act enacted in 1975] ).

To implement this policy, the Legislature directed the Commissioner of Environmental Conservation to inventory all tidal wetlands in the State of New York (ECL 25-0201). The Commissioner was also empowered to regulate the use of inventoried wetlands as well as the areas immediately adjacent thereto (ECL 25-0202, 25-0301, 25-0302; de St. Aubin v. Flacke, 68 N.Y.2d 66, 70, ...