Spears v. Berle

Decision Date18 October 1979
Citation48 N.Y.2d 254,422 N.Y.S.2d 636,397 N.E.2d 1304
Parties, 397 N.E.2d 1304, 13 ERC 2160, 9 Envtl. L. Rep. 20,796 Harry O. SPEARS et al., Respondents, v. Peter A. A. BERLE, as Commissioner of Environmental Conservation of the State of New York, et al., Appellants.
CourtNew York Court of Appeals Court of Appeals
OPINION OF THE COURT

COOKE, Chief Judge.

Petitioners own two parcels of land. One, known as the "Culver" property, contains 38 acres of freshwater wetland out of a total of approximately 51 acres. The second tract has an area of about 43 acres and an 8-acre wetland referred to as "Spears' Bog". Both properties were classified as wetlands, the first because of its size, the second because it was determined by the Commissioner of Environmental Conservation (the Commissioner) to be an area of unusual local importance (ECL 24-0301, subd. 1).

In March of 1977 petitioners applied to the Commissioner for a permit allowing extraction of humus, sand and stone from the wetlands. 1 After a public hearing, where undisputed evidence showed that the proposed mining activities would lead to all but complete destruction of the wetlands, the Commissioner denied the application. Although petitioners conceded during the hearing that a grant of the permit would be inconsistent with the purposes of wetland regulation, Richard A. Spears, the sole witness for petitioners, voiced his opinion that mining was the only use of the property which would produce a reasonable economic return.

Petitioners commenced this proceeding, seeking an order directing the Commissioner to issue the permit, or institute condemnation proceedings. Supreme Court, Sullivan County, transferred the proceeding to the Appellate Division. Finding that petitioners had been deprived of all reasonable return on their property, a divided Appellate Division granted the requested relief. We now reverse and remit to Supreme Court for an evidentiary hearing.

The Freshwater Wetlands Act, enacted in 1975, was designed "to secure the natural benefits of freshwater wetlands, consistent with the general welfare and beneficial economic, social and agricultural development of the state" (ECL 24- Thus, a balance is struck between ecological and economic considerations by preserving and protecting freshwater wetlands while permitting reasonable economic use and development. 2 To that end the Commissioner was empowered to identify the freshwater waterlands of the State (ECL 24-0301). Property so designated becomes subject to rigorous regulation, with certain uses permitted as of right and others permissible only by permit. As of right uses include recreational or commercial fishing, shell-fishing, aquaculture, hunting and trapping (ECL 24-0701, subd. 3). Other permitted activities are grazing and watering livestock, harvesting natural products of the land, selective cutting of timber, and draining and other use of the land for growing agricultural products (ECL 24-0701, subd. 4). Activities not expressly permitted may be conducted only if a permit is granted (ECL 24-0701, subd. 1). A permit may issue upon a showing by the applicant that the proposed use is "in accord with the policies and provisions of" the act (ECL 24-0703, subd. 4; 24-0705, subd. 3). Until the final wetland classifications are promulgated by the Commissioner, interim permits are available on generally the same basis as final permits (6 NYCRR Part 662).

To render the act free from constitutional infirmities, the Legislature included section 24-0705 which affords a property owner judicial review of a decision denying a permit. Within the context of the review proceeding, a court is authorized to determine whether denial of the permit was proper and, if so, whether the regulation of the particular land has become so rigorous as to amount to a taking without just compensation (ECL 24-0705, subd. 7). Hence, each aggrieved landowner is entitled to a day in court, at which time it may be determined if application of the act to the land is consistent with constitutional strictures. If application of the wetland regulations to a particular parcel would result in a taking, the remedy is to direct the Commissioner to either grant the requested permit or institute condemnation proceedings. Given this remedy, a formal declaration as to the constitutionality of the act in any particular instance is unnecessary (compare French Investing Co. v. City of New York, 39 N.Y.2d 587, 594-595, 385 N.Y.S.2d 5, 8-9, 350 N.E.2d 381, 384-385).

A proceeding by a wetlands owner under section 24-0705 (subd. 7) is somewhat novel and possesses a dual nature. First, the reviewing court must determine whether the denial of the permit had a rational basis and was supported by substantial evidence (cf. Matter of Fuhst v. Foley, 45 N.Y.2d 441, 444, 410 N.Y.S.2d 56, 57, 382 N.E.2d 756, 757; Matter of Cowan v. Kern, 41 N.Y.2d 591, 598-599, 394 N.Y.S.2d 579, 583-584, 363 N.E.2d 305, 303-310). If the administrative decision is sustained, it then becomes necessary to evaluate whether the wetlands regulations, considered together with the denial of the permit, would work an unconstitutional taking of petitioner's property. For the latter aspect of the proceeding, there must be an evidentiary hearing at which the landowner and the State may produce expert testimony and other evidence bearing upon the regulation's effect on the value of the subject parcel 3 (see, e. g., Matter of Charles v. Diamond, 41 N.Y.2d 318, 326-328, 392 N.Y.S.2d 594, 600-602, 360 N.E.2d 1295, 1301-1303). It is only after such a hearing that the extent of the financial hardship, if any, may be meaningfully assessed.

On the merits, then, the threshold issue is whether the denial of the interim permit had a rational basis and was supported by substantial evidence. In the present case, little discussion of this point is necessary. At the hearing, petitioners conceded, in essence, that the proposed mining activity would virtually destroy the wetlands. Thus, issuance of a permit by the Commissioner was proscribed by the act itself (ECL 24-0705, subd. 3). But even if this were not so, petitioners' failure to supply the data required to support its application might have constituted an independent ground for the denial. In these circumstances, therefore, we cannot conclude that the Commissioner's decision was unwarranted or improper.

Proceeding to the second tier of analysis, it must be determined whether the wetlands act, coupled with the denial of the interim permit, has placed such an onerous burden on the property that a taking must be deemed to have occurred. The notion that there are limits beyond which even the most exemplary regulatory scheme may not tread is not new. Indeed, this court has not hesitated to condemn statutes or ordinances which completely deprive the owner of the beneficial use of private property under the guise of regulation (see, e. g., Lutheran Church in Amer. v. City of New York, 35 N.Y.2d 121, 130, 359 N.Y.S.2d 7, 15, 316 N.E.2d 305, 311; Vernon Park Realty v. City of Mount Vernon, 307 N.Y. 493, 498-499, 121 N.E.2d 517, 519, 520). The evil in such a case, although often referred to as a taking, lies not in an actual physical entry but rather in regulation which results in economic destruction (see, e. g., French Investing Co. v. City of New York, 39 N.Y.2d 587, 594-597, 385 N.Y.S.2d 5, 8-11, 350 N.E.2d 381, 384-387, Supra ). At the same time, of course, it is important to recognize the breadth of the State's police power and the means by which that power may be exercised. In view of these conflicting considerations, courts have encountered difficulty in formulating a bright-line standard for differentiating permissible police power measures from overly vigorous and hence unconstitutional impositions (see, e. g., Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 123-124, 98 S.Ct. 2646, 57 L.Ed.2d 631, affg. 42 N.Y.2d 324, 397 N.Y.S.2d 914, 366 N.E.2d 1271; compare Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 323, with Goldblatt v. Hempstead, 369 U.S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130; see, generally, Sax, Takings and the Police Power, 74 Yale L. J. 36).

Nonetheless, there has evolved from our decisions a standard which, while retaining an element of flexibility, is capable of practical application. Under this test, a land use regulation be it a universally applicable local zoning ordinance or a more circumscribed measure governing only certain designated properties is deemed too onerous when it "renders the property unsuitable for any reasonable income(,) productive or other private use for which it is adapted and thus destroys its economic value, or all but a bare residue of its value" (French Investing Co. v. City of New York, 39 N.Y.2d 587, 596, 385 N.Y.S.2d 5, 10, 350 N.E.2d 381, 387, Supra ; see, e. g., Marcus Assoc. v. Town of Huntington, 45 N.Y.2d 501, 506, 410 N.Y.S.2d 546, 547, 382 N.E.2d 1323, 1324; Modjeska Sign Studios v. Berle, 43 N.Y.2d 468, 474-475, 402 N.Y.S.2d 359, 363-364, 373 N.E.2d 255, 258-259; Penn Cent. Transp. Co. v. City of New York, 42 N.Y.2d 324, 329-331, 336, 397 N.Y.S.2d 914 916-918, 921, 366 N.E.2d 1271, 1273-1275, 1277, affd, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631, Supra; McGowan v. Cohalan, 41 N.Y.2d 434, 436, 393 N.Y.S.2d 376, 361 N.E.2d 1025, 1026; Williams v....

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