A recent Second Department decision, Matter of Reddock v New York State Dept. of Envtl. Conservation, highlights a unique procedural quirk involving Article 78 proceedings where the challenge is based upon “substantial evidence”.
The petitioners in Reddock own a 2.07-acre parcel of property in the Town of Smithtown adjacent to the Nissequogue River (the “Property”) and within the Nissequogue Recreational River Corridor (the “Corridor”), as defined in New York Environmental Conservation Law Section 15-2714(3)(ee), part of the Wild, Scenic and Recreational Rivers System Act (the “WSRRSA”). The Property is improved with a single-family dwelling and a detached accessory structure. Pursuant to the implementing regulations of the WSRRSA, lots located within the Corridor must be a minimum of two acres in size (see 6 NYCRR 666.13 [C]  [b], note [iii]). The petitioners sought to subdivide the Property into two separate lots of one acre and 1.07 acres. Their proposal involved the removal of the accessory structure and the construction of a new dwelling on the slightly larger lot.
The petitioners applied to the New York State Department of Environmental Conservation (the “DEC”) for a permit and area variance to allow them to subdivide the Property in accordance with their proposed plans. However, after an evidentiary hearing before an Administrative Law Judge, the DEC denied their application in its entirety “because, inter alia, the proposed subdivision would increase area density and pollution into the river . . . .”
Thereafter, the petitioners commenced an Article 78 proceeding appealing that denial, arguing that it “did not have a basis in substantial evidence, or was otherwise arbitrary and capricious,” because the DEC failed to properly consider all of the relevant factors necessary for an area variance.
CPLR § 7803(4) permits courts to review whether an administrative “determination made as a result of a hearing held, and at which evidence was taken, . . . [is] supported by substantial evidence” (CPLR § 7803 ). However, when an Article 78 proceeding challenges a determination based upon substantial evidence, the court must first address other objections in law that could terminate the proceeding, and if there are none, it must transfer the case to the Appellate Division to decide the issue of substantial evidence (see CPLR § 7804 [g]).
That is precisely what occurred in Reddock. When the petitioners raised the issue of substantial evidence, the DEC promptly requested transfer to the Appellate Division for disposition on that issue. Here, because there were no other objections which could terminate the proceeding, the court did just that.
In the Appellate Division, the Second Department’s inquiry into substantial evidence turned on whether there was “‘relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact’ (Matter of Mangels v Zucker, 168 AD3d 1060, 1061 . . . .)”. In so deciding, the Second Department concluded that the DEC’s denial of the petitioners’ application was supported by substantial evidence and that, in rendering its determination, the DEC “was entitled to consider the precedential effect that granting a variance to the petitioners would have on future applications for [non-compliant] subdivisions.”
In addition to the interesting facts and substantive issues that this case offers, it also serves as an important reminder to litigators to be aware of unique procedural rules that may apply to certain proceedings.