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Rebuilding Lower Manhattan

New York Law Journal

October 26, 2001
by Stephen L. Kass and Jean McCarroll

There has been considerable public discussion about the best way to rebuild the most prominent urban real estate in the world, Lower Manhattan, following the September 11 attack on the World Trade Center.  A number of environmental organizations and observers have now joined the debate, conscious that the long-term environmental implications of the rebuilding effort will far exceed the short-term air quality and other impacts of the Trade Center’s destruction.  For lawyers, this means focusing first on the process by which rebuilding decisions will be made and implemented. In a real sense, that process may be as important as the rebuilding decisions themselves, since even the wisest and most imaginative plans with the strongest political support can be frustrated by the delays, acrimony and litigation for which major land-use projects are famous in New York. Unless these obstacles can be overcome at the outset, New York developers, tenants and investors may choose to rebuild outside the City -- a process that may already be underway.

Because we believe a vital Lower Manhattan is essential to the economic, social, cultural and environmental benefits of a vital New York City, we offer below our suggestions for a rebuilding process that can be both informed and expedited -- and that complies with the essence of applicable environmental and planning requirements while minimizing the risk of protracted litigation. While this will require extraordinary environmental review, permitting and judicial review procedures, we believe the challenges faced by New York City and State and the environmental benefits of a vital urban core warrant serious consideration of such actions.

1.            Environmental Review.  The city, state and federal governments all have mandatory environmental review processes that are likely to apply to any substantial rebuilding program that utilizes, as it surely will, federal funds and requires discretionary funding or approval from local or state officials. Yet environmental impact statements (EISs) under the National Environmental Policy Act (NEPA), the State Environmental Quality Review Act (SEQRA) and the City Environmental Quality Review (CEQR) can each take several years and, of course, lead to inconsistent results. One way to avoid this is to have the relevant city, state and federal agencies undertake a coordinated environmental review based on a single EIS that they prepare as co-lead agencies, a process specifically authorized by NEPA, SEQRA and CEQR regulations. As Professor Nicholas Robinson of Pace Law School and a committee from the Municipal Art Society, among others, have noted, such a coordinated review could also be characterized as a "generic EIS" for the overall rebuilding plan, thus reducing the need for subsequent EISs for individual development decisions intended to implement the overall rebuilding plan.

While a single joint EIS is an attractive option, particularly if it qualifies as a generic assessment of the overall rebuilding program, it is not without problems. NEPA regulations often require substantially longer consultation and comment periods than SEQRA or CEQR, so that simply encouraging the City and State to act as co-lead agencies under NEPA may actually delay local or state action until federal requirements have been satisfied. While both SEQRA and CEQR provide that a federal EIS can substitute for one otherwise required for state or local actions, NEPA contains no such reciprocal provision.

There are at least two possible approaches to this problem. The first, more difficult to achieve, would be to amend NEPA to provide that, for any federal action relating to the rebuilding of the World Trade Center and its environs, a properly prepared state or local EIS can satisfy the requirement for a NEPA EIS. The second approach -- preferable in our view -- would be for the relevant federal agencies to accelerate their public comment and review periods under NEPA for matters related to the Lower Manhattan rebuilding program.  Such regulatory changes could be noticed and implemented on an emergency basis and be in effect by the time the rebuilding program is ripe for review. While their effect would be to abbreviate somewhat federal comment periods, both SEQRA and CEQR provide ample opportunity for meaningful public comment during the EIS process.

2.            Permitting.  Simplifying the EIS process does not, however, eliminate the problems posed by multiple city, state and federal permit requirements that have delayed and at times derailed major development projects in New York and elsewhere. At the state level, New York has sought to reduce these conflicts by providing for "one-stop" permitting for certain kinds of projects through participation by the Empire State Development Corporation (ESDC), which has specific "override" authority over most local approvals, and through the Article X licensing process for major power plants, which provides for accelerated licensing reviews by the New York Siting Board on Electric Power Generation and the Environment, which in turn coordinates its proceedings with those of the New York State Department of Environmental Conservation (DEC).

A similar effort is required for the World Trade Center rebuilding program, not only for the Trade Center site, but also for the larger affected area extending from Broadway to the Hudson River between Park Place on the north and Rector Street or even Battery Park on the south.  To accomplish this, a new Lower Manhattan public authority with override, permitting and condemnation powers at least equal to those of the ESDC should be established by the State, with both gubernatorial and mayoral appointees on its board of directors, which might also include the chairs of ESDC, the Battery Park City Authority, the City Planning Commission and the Port Authority of New York and New Jersey, which owns the Trade Center site.

Such a Lower Manhattan redevelopment authority should be exempt, by virtue of its state status, from municipal land-use approvals, including New York City's Uniform Land Use Review Procedure (ULURP). Such an exemption would be highly controversial, yet warranted if the rebuilding process is to succeed. The issues involved in rebuilding Lower Manhattan concern the entire City and region, not simply the community planning boards and Council members who have such prominent roles in the ULURP process, which would require at least seven months (and likely considerably more) after completion of the generic EIS for the rebuilding process.

It would be somewhat more difficult, though not impossible, to avoid the need for applicable state permits from DEC, the Department of State or the Department of Transportation, which could be identified only after the rebuilding program is more fully developed. While it might be possible for the State Legislature to assign to the new authority responsibility for all coastal zone, highway, air quality, water quality and hazardous waste permits otherwise required from state agencies, approval for such delegations would also be required from relevant federal agencies, which might well balk at assigning permit responsibility to a single-purpose development agency with no expertise in the substantive areas involved. It would therefore be preferable for the Legislature to provide for shortened permit review periods and legislative (rather than adjudicatory) hearings for any state permits required for the Lower Manhattan rebuilding program.  The State should also see to it that the involved agencies have the necessary resources to carry out such expedited permit reviews, as DEC did in connection with the air quality permits required for the New York Power Authority's successful effort to install natural gas turbines in New York City this past summer.

Federal permits could be handled in a similar fashion. It might, in theory, be possible for Congress to declare the redevelopment authority a federal (as well as a state) agency and to reassign to it the specialized permitting roles of the Environmental Protection Agency, the Army Corps of Engineers or the Advisory Council on Historic Preservation insofar as they involved the Lower Manhattan rebuilding program.  However, it would be preferable, and far more practical, for Congress simply to specify expedited permit review and comment periods for all federal approvals required for the  rebuilding program and to provide for such approvals to be deemed granted if agencies fail to act in a timely manner. Congress could, however, consider designating the redevelopment authority a federal agency (in addition to its status as a state agency) in order to give it federal condemnation power over any real property (such as highway roadbeds or title to the Trade Center site) necessary to carry out the rebuilding program.

3.            Judicial Review.  Neither coordinated EIS review nor override power nor expedited permitting will eliminate the risk of protracted litigation from discontented developers or property owners, neighbors threatened by redevelopment or non-profit groups who differ with the redevelopment authority's planning or environmental judgments. Yet the prospect of such litigation can have significant chilling effects on the overall rebuilding program and needs to be addressed at the outset in a way that preserves meaningful environmental and planning participation from the public and the essential role of courts in assuring governmental compliance with law.

Here, too, there are two approaches that deserve consideration. Under the first, New York's Chief Judge and Administrative Judge could designate special Supreme Court parts to handle all litigation concerning the rebuilding program on an expedited basis and could request the Appellate Division, First Department, to do the same through a specially designated panel. While such steps could go far toward reducing the risk of inconsistent or even protracted judicial decision making, it could not eliminate the statutory time periods specified in the CPLR for commencing Article 78 proceedings or perfecting appeals of unfavorable decisions, steps that by themselves can consume more than a year.

The second approach, which would require action by the Legislature based on a finding that the redevelopment of Lower Manhattan must be carried out without undue delay, seeks to avoid that risk by providing for mandatory arbitration of all rebuilding challenges by a special arbitration panel, with direct (and expedited) review of arbitral awards by the Appellate Division under the familiar principle that arbitrators' decisions can be set aside only if they are tainted by bias, corruption, fraud or misconduct, conflict with applicable procedure, or exceed the arbitrators’ powers. However, to be eligible to invoke the arbitration process in lieu of conventional litigation, the redevelopment authority would have to offer interested property owners, neighbors and non-profit organizations an opportunity to review the proposed project in depth in a structured work session at which alternative proposals could be presented and discussed with the authority's consultants and senior staff (in addition to the combined public hearings under SEQRA, NEPA and any applicable state or federal permit requirements).

As a practical matter, such a work session is far more likely to influence both substantive planning decisions and environmental impact analyses than conventional public hearings or the written submissions that typically follow such hearings. While the arbitration panel may be expected to defer substantially to the redevelopment authority in reviewing the rebuilding plan's merits and the authority's findings under applicable laws, a reviewing court would be expected to do the same under New York law, and with far less familiarity with the complexities of the rebuilding program or the authority's governing statute than the arbitrators may be expected to have. Unlike most courts, however, the arbitrators should be authorized to require a losing party to pay the prevailing party's attorneys’ fees if the arbitrators find a challenge to the arbitrators’ decision (or a defense of such a decision) is either frivolous or substantially unfounded.

The foregoing suggestions are aimed at reducing delay in state court challenges to the rebuilding program, rather than in federal litigation. While Article III of the Constitution, among other considerations, limits the degree to which a similar approach might be considered at the federal level, federal litigation is far less likely to delay the rebuilding program substantially and far less likely to do so without a serious legal basis. The congressional findings and regulatory procedures outlined above are, we believe, likely to encourage prompt judicial review by both district and circuit courts without the need for expedited arbitration or other procedural reforms appropriate to reduce delays at the state level. Moreover, most federal permits likely to be required for the rebuilding program have already been delegated to the State and would therefore be included in the expedited procedures proposed above for state actions. While federal challenges under NEPA could still be brought in federal court, expedited state court review of comparable SEQRA claims might well make the federal claims moot or subject to res judicata or collateral estoppel defenses.


Stephen L. Kass and Jean M. McCarroll, together with Clifford P. Case, direct the Environmental Practice Group at Carter, Ledyard & Milburn.


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This article is reprinted with permission from the October 26, 2001 edition of the New York Law Journal. © 2001 NLP IP Company.


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