In Miranda Holdings v. Town Board of Town of Orchard Park, ____ N.Y.S. 3d, ____, 2017 WL 2884633 (4th Dept. July 7, 2017), Petitioner, Miranda, proposed a commercial structure that included a restaurant with a drive-through window. The Town Board was not happy.  Not only did the Board improperly declare the proposed restaurant with a drive-through as a Type I action under SEQRA, but also it required a full-blown EIS.  Further,  the Town enacted a local law specifically declaring that, going forward, all restaurants with a drive-through would be categorized as Type I actions.

Although the Appellate Division upheld the trial court’s determination that that law does not allow the Town to reclassify actions in a manner that is contrary to the DEC classification, the Court, without any real explanation, remitted the matter back to the Town for further findings consistent with its opinion.

In Miranda’s favor, the Appellate Division upheld the trial court’s decision to invalidate the local law, which reclassified all restaurants with a drive-through as Type I actions wholly inconsistent with the DEC’s Type II designation.

The Town’s Actions

At first, the Town determined that the project was an Unlisted action under the State Environmental Quality Review Act (“SEQRA”) and SEQRA Regulations. See, 6 NYCRR Part 617. The Town issued a “positive declaration” requiring that Miranda prepare an Environmental Impact Statement (“EIS”). A full-blown EIS is difficult, time consuming and expensive. Unsurprisingly, Miranda claimed that the proposed project was a Type II action under the regulations and, therefore, was exempt from all environmental review and from preparing an EIS. In response, the Town passed a resolution making a drive-through restaurant project a Type I action, so that it was presumed to require an EIS. Miranda sued, arguing that the Town (1) was out of bounds, (2) was not allowed to make the project a Type I action because by its nature, it is a Type II action and (3) could not require that Miranda prepare an EIS.

What a mess! The Court’s decision does not add a lot of clarity.

The Trial Court Decision and SEQRA

Like ancient Gaul, all SEQRA actions are divided into three parts – Type I, Type II and Unlisted. A Type I action “carries with it the presumption that it is likely to have a significant adverse impact on the environment and may require an EIS. Type II actions are just the opposite – they are exempt from environmental review under SEQRA and thus not only is an EIS not required, but no review is technically required. “Unlisted” actions are everything that is neither Type I nor Type II, thus allowing latitude in what additional review is necessary.

Most Type I and Type II projects are defined in the NY Dept. of Environmental Conservation (“DEC”) Regulations. For example, all permits and variances regarding single-family homes are Type II actions. However, municipalities may also adopt their own lists of Type I and Type II actions, so long as they do not conflict with the DEC’s lists. In particular, a municipality “may not designate as Type I any action identified as a Type II” in the DEC Regulations.

One of the actions identified as a Type II under the DEC Regulations is a commercial facility (or extension) of up to 4,000 sq. ft., which otherwise meets zoning, such as use restrictions, setbacks or height limits. When the Town initially determined that the proposed drive-through restaurant was “Unlisted,” the developer argued that this 4000-sq. ft. commercial facility provision made the project a defacto Type II action exempt from SEQRA. The Town’s reaction in passing the local law was to make all drive-through facilities into Type I actions – spurring the developer’s lawsuit, claiming that the Town could not convert a Type II action into a Type I action.

The trial court decided in Miranda’s favor, holding that because a drive-through facility was a Type II action under SEQRA, the Town could not automatically make it a Type I action.

The Court acknowledged that the Regulations do not specifically list drive-through facilities as Type II actions. However, the SEQRA Handbook published by the DEC does mention fast food facilities as being within the contemplation of the 4,000 sq. ft. Type II and also gives as an example of a Type II, the expansion of a commercial restaurant where the project is less than 4,000 sq. ft. The Court also noted that the Final Generic Environmental Impact Study prepared by DEC in connection with the 1995 adoption of proposed amendments to the Regulations – including the 4,000 sq. ft. commercial project as a Type II – directly referenced a “drive-through window” as part of the commercial expansion that would be exempted if the 4,000 sq. ft. limitation were met. Therefore, the Court concluded that the DEC “contemplated restaurants with drive-through windows as Type II actions.”

The Appellate Division Determination

However – and here is the mystery – the Appellate Division held that the Supreme Court should not have found that the proposed restaurant was a “4,000 sq. ft.” Type II – without “a revised review” by the Town. What is there to review?

The Appellate Division may have had some empathy with the Town’s concerns and afforded it the opportunity to look more closely at the proposed project. More fundamentally, the “4,000 sq. ft.” Type II is very broad and can easily include projects that pose potential for significant impacts, like traffic and air quality. Despite the fact that the DEC determined that projects of this limited size “do not rise to the level of significance envisioned by [SEQRA] as requiring an EIS,” perhaps other aspects of the proposed development needed further review by the Town.

What the Appellate Division did unequivocally declare is that a municipality cannot reclassify a project from a Type II to a Type I, as this is prohibited under SEQRA.  Invalidation of the local law was upheld.

The bottom line lesson is that municipalities should address planning and zoning concerns for their ordinary development through zoning and planning; not by a short cut in trying to stretch environmental review beyond the DEC regulations specific to each project.