| Matter of Lamar Cent. Outdoor, LLC v State of New York |
| 2009 NY Slip Op 05717 [64 AD3d 944] |
| July 9, 2009 |
| Appellate Division, Third Department |
| In the Matter of Lamar Central Outdoor, LLC, Doing Business asLamar Advertising, Respondent, v State of New York et al.,Appellants. |
—[*1] Wilder & Linneball, L.L.P., Buffalo (Laura A. Linneball of counsel), forrespondent.
Garry, J. Appeals (1) from a judgment of the Supreme Court (Platkin, J.), entered May 6,2008 in Albany County, which, among other things, granted petitioner's application, in aproceeding pursuant to CPLR article 78, to annul a determination of respondent Department ofTransportation denying petitioner's request for a sign permit, and (2) from an order of said court,entered October 10, 2008, which denied respondents' motion for reconsideration.
The Ninth Ward Memorial and Service League, a fraternal organization affiliated with theAmerican Legion (hereinafter the American Legion), owns real property in the City of Albanyconsisting of .29 acres and located in an R2B zone, a one- and two-family medium-densityresidential district as defined by the Albany City Code. The property has allegedly been used formany years as an American Legion Post. Under the Code, such a use by a fraternal organizationis limited to commercial zones, but the American Legion's nonconforming use is allegedly"grandfathered" because it predates the Code's enactment. The property is located less than 660feet from an interstate highway and within a "Billboard Zone" created by the City in 2003 as partof its comprehensive zoning plan.
In August 2006, as part of a litigation settlement, the City issued a building permit topetitioner, a corporation in the business of erecting, leasing, and selling outdoor advertising[*2]structures, to place a billboard on the property. Petitionerentered into a lease with the American Legion and applied to respondent Department ofTransportation (hereinafter DOT) for a permit. DOT denied the permit application on the groundthat the property was located in an area zoned as residential and was not located in a commercialor industrial zone as required by Highway Law § 88 and 17 NYCRR 150.5 (b) (1).Petitioner's lease manager sent DOT a copy of the City's stipulation allowing the billboard,inquiring whether the stipulation would permit DOT to rescind its denial or whether petitionerwould "need to go back to the City for them to change the zoning classification." DOT replied bycorrespondence reiterating its previous denial.
In June 2007, the City enacted an ordinance rezoning the property from R2B to C-1, aneighborhood commercial district. Petitioner promptly submitted a new permit application toDOT with a copy of the ordinance. DOT again denied the application, refusing to recognize thezoning change for purposes of outdoor advertising control and stating, "Since the parcelssurrounding this site remain zones R2B and R2A, this action is not part of comprehensive zoningand these parcels were rezoned primarily for the purposes of permitting this sign."
Petitioner commenced this proceeding pursuant to CPLR article 78 challenging DOT's denialof its permit application. Supreme Court granted the petition, annulled DOT's determination, anddirected it to issue the permit. Respondents moved for leave to reargue or renew, and the courtdenied the motion. Respondents appeal from both determinations.
The Federal Highway Beautification Act (hereinafter FHBA) (see 23 USC §131) controls the placement of billboards along interstate and primary highway systems andrequires states to provide for the effective control of such billboards or risk losing 10% of theirfederal highway funds (see 23 USC § 131 [b]). The FHBA allows billboards to beerected within 660 feet of interstate and primary highway systems in areas zoned under state lawas industrial or commercial (see 23 USC § 131 [b]). In compliance with theFHBA, New York State enacted Highway Law § 88 authorizing the Commissioner ofTransportation to regulate the placement of billboards along highways pursuant, in part, to"national standards promulgated by the secretary of transportation of the United States"(Highway Law § 88 [5]). Accordingly, the Commissioner of Transportation promulgatedstate regulations controlling the erection of billboards, including 17 NYCRR 150.5 (b) (1), whichlimits the placement of billboards as required by the FHBA.
It is undisputed that the proposed billboard complies with federal, state, and cityrequirements in that it is located within 660 feet of an interstate highway and in the City's"Billboard Zone" (see 23 USC § 131 [b]; Highway Law § 88 [5]; 17NYCRR 150.5 [b] [1]). However, DOT based its denial of the permit on 23 CFR 750.708 (b),promulgated by the Secretary of Transportation pursuant to the FHBA, which provides: "Stateand local zoning actions must be taken pursuant to the State's zoning enabling statute orconstitutional authority and in accordance therewith. Action which is not a part ofcomprehensive zoning and is created primarily to permit outdoor advertising structures, is notrecognized as zoning for outdoor advertising control purposes" (23 CFR 750.708 [b]).
DOT asserts that this regulation establishes a national standard to which it must conform andthat it properly applied the regulation in refusing to recognize the City's rezoning of the property.Supreme Court held that the property's zoning change merely comported with its long-standingactual commercial use and that neither federal nor state law provided a basis for [*3]DOT's refusal to recognize the City's rezoning of the property. Inreaching this determination, the court found that it did not owe deference to DOT's interpretationof 23 CFR 750.708 (b) because DOT did not follow the federal interpretation of the regulation asset forth in a legal opinion (hereinafter the opinion letter) of the chief counsel of the FederalHighway Administration (hereinafter FHA). The opinion letter explains that the regulation'sintent is to avoid "sham zoning" enacted solely to circumvent the FHBA by opening up areas forbillboards rather than in furtherance of a community's comprehensive planning goals. Theopinion letter sets forth several factors to be considered in this analysis, no one of which isdeterminative, and states that the FHA will not be required to accept a zoning action as valid if acombination of factors demonstrates that the action "is primarily to allow billboards in areas thathave none of the attributes of a commercial or industrial area." Based on this interpretation of 23CFR 750.708 (b) and on the property's long-standing commercial use, Supreme Court found thatneither state nor federal law provided a valid basis for DOT's refusal to recognize the City'srezoning of the property.
In reviewing this agency determination, the standard of review is "whether [it] was arbitraryand capricious or affected by an error of law" (Matter of Scherbyn v Wayne-Finger LakesBd. of Coop. Educ. Servs., 77 NY2d 753, 758 [1991]; see CPLR 7803 [3]; Matter of Paulsen Dev. Co. of Albany,LLC v County of Schenectady Dept. of Eng'g & Pub. Works, 47 AD3d 1031, 1034[2008]). Essentially, the test is one of rationality (see Matter of Pell v Board of Educ. ofUnion Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County,34 NY2d 222, 231 [1974]). Supreme Court determined that DOT misinterpreted 23 CFR 750.708(b). However, "the construction given statutes and regulations by the agency responsible for theiradministration will, if not irrational or unreasonable, be upheld" (Matter of Johnson vJoy, 48 NY2d 689, 691 [1979]). DOT is vested with the authority to regulate outdooradvertising signs along interstate highways in New York and is responsible for theadministration of statutes and regulations applicable to such signs (see Highway Law§ 88; Niagara Falls Sightseeing by Sheridan v Penn Adv., 163 AD2d 861, 862[1990], lv denied 77 NY2d 803 [1991]). Therefore, if DOT's interpretation of 23 CFR750.708 (b) is not irrational or unreasonable, it is entitled to deference (see Matter of Johnsonv Joy, 48 NY2d at 691; Matter of Skyline Specialty v Gargano, 294 AD2d 742, 742[2002]). Further, as the agency responsible for the regulation of billboards, "DOT's decision togrant or deny a sign permit is entitled to great weight and will be upheld if reasonable"(Matter of Trea v New York State Dept. of Transp., 265 AD2d 847, 847 [1999]).
According to its June 2007 letter, DOT determined that the rezoning was not part ofcomprehensive zoning and had taken place primarily for the purpose of permitting a billboardbecause the parcels surrounding the site continued to be residentially zoned. This determinationwas based on the information presented, including, among other things, the original applicationstating that the property was residentially zoned, the lease agreement for a proposed billboard,the city building permit for the billboard, the litigation stipulation permitting the billboard, andpetitioner's letter responding to the first denial by inquiring whether it would be necessary toreturn to the City "for them to change the zoning classification." Also before DOT waspetitioner's second permit application referring to the earlier denial and enclosing the City'sordinance that rezoned the property from a residential to a commercial classification. It wasneither irrational nor unreasonable for DOT to conclude from this evidence and from the fact thatthe zoning of the surrounding area was unchanged that, under 23 CFR 750.708 (b), it could notrecognize the rezoning as valid for outdoor advertising purposes.[*4]
Supreme Court determined that DOT should have basedits decision on the property's long-standing commercial use by the American Legion. However,it does not appear that DOT had any information before it regarding the property's history or thealleged "grandfathered" status of its nonconforming commercial use when the decision wasreached. In a CPLR article 78 proceeding, judicial review of an agency determination "is limitedto the grounds stated in the determination" (Matter of Home Depot U.S.A., Inc. v New York State Pub. Serv.Commn., 55 AD3d 1111, 1114 [2008]; see Matter of Scherbyn v Wayne-FingerLakes Bd. of Coop. Educ. Servs., 77 NY2d at 758) and is "confined to the facts and recordadduced before the agency" (Matter ofRizzo v New York State Div. of Hous. & Community Renewal, 6 NY3d 104, 110[2005] [internal quotation marks and citations omitted]). In determining whether an agency'sdetermination was sound, the court may not rely on evidentiary submissions that were not beforethe agency (see Matter of WorldBuddhist Ch'An Jing Ctr., Inc. v Schoeberl, 45 AD3d 947, 951 [2007]), nor may itsubstitute what it finds to be "a more appropriate or proper basis" for the grounds the agencyactually relied upon (Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d588, 593 [1982]). Further, in view of the other evidence, we cannot find as a matter of law thatDOT would have been compelled to recognize the property's rezoning based on the single factorof its previous commercial use even if that information had been provided. As DOT's denial ofpetitioner's application for a billboard permit was rationally based on the evidence presented to itand on DOT's reasonable construction of 23 CFR 750.708 (b), we may not disturb it.
Petitioner argued before Supreme Court that DOT lacked authority to enforce 23 CFR750.708 (b) because the limitations it imposes on the acceptability of local zoning for purposesof billboard control contradict the plain language of 23 USC § 131 (d), which recognizesthe states' "full authority" to zone property for commercial purposes and provides that suchactions "will be accepted" for purposes of the FHBA (see Koshland v Helvering, 298 US441, 446-447 [1936]). The court stated in dicta that it saw "considerable force" in petitioner'sargument but, in view of its substantive determination, did not reach the issue. Our conclusionthat DOT's interpretation and application of 23 CFR 750.708 (b) was not irrational thus leavesunresolved the underlying question of the regulation's validity. Although a proceeding underCPLR article 78 cannot be used to review legislative action, as the parties have fully briefed theissue, we exercise our discretion pursuant to CPLR 103 (c) to partially convert the proceeding toone for declaratory judgment regarding this issue and proceed to the merits (see Matter ofNicholas v Kahn, 62 AD2d 302, 308 [1978], mod on other grounds 47 NY2d 24[1979]; Matter of Broadacres Skilled Nursing Facility v Ingraham, 51 AD2d 243,244-245 [1976]).
The interpretation of legislation must be "consistent with the purpose for which it wasenacted" (Matter of Oestrich, 61AD3d 1317, 1319 [2009]; see Matter of Yolanda D., 88 NY2d 790, 795 [1996]).The purpose of the FHBA is to control billboards erected near interstate and primary highwaysystems in order "to protect the public investment in such highways, to promote the safety andrecreational value of public travel, and to preserve natural beauty" (23 USC § 131 [a]). Tocarry out that purpose, Congress delegated authority to the Secretary of Transportation to"prescribe and promulgate all needful rules and regulations" to carry out the provisions of theFHBA (23 USC § 315). The legislative history indicates that Congress did not intend thebroad language of 23 USC § 131 (d) pertaining to the zoning power of the states to stripthe Secretary of regulatory authority to prevent states from taking zoning actions intended solelyto permit billboards along interstate highways. On the contrary, the 1965 report of theCommittee on Public Works recommending the passage of the bill that became the FHBAreveals that Congress contemplated that the Secretary would enforce the FHBA's provisions toprevent the states from [*5]taking such actions. The report statesthat "the purpose of [the FHBA] is to preserve and develop the recreational and esthetic valuesof the interstate and primary highway systems, and it would be wholly inconsistent with thispurpose for a State to engage in such [zoning actions]" (Rep of Comm on Pub Works, at 6, S Rep89-709, 89th Cong, 1st Sess).
Courts in other jurisdictions that have examined this issue have concluded that Congress didnot intend to cede full authority over zoning with respect to outdoor advertising control to stateand local governments. A federal district court in South Dakota held that the language in 23 USC§ 131 (d) pertaining to state zoning authority did not indicate a congressional intent to"subvert the [FHBA]'s stated purpose to arbitrary actions taken by the individual statelegislatures" (State of S. Dakota v Volpe, 353 F Supp 335, 340 [D SD 1973]). The courtfurther quoted from the FHBA's legislative history as follows: " '[The FHBA's languageauthorizing the states to zone areas for commercial or industrial purposes], of course, does notmean that a state or local authority could place a label 'zoned commercial or industrial' on landadjacent to the Interstate and primary systems solely to permit billboards or junkyards andthereby frustrate the intent of Congress stated in [23 USC § ] 131 (a)' " (id.,quoting 89 Cong Rec 26820 [1965]).
Similarly, the Nevada Supreme Court determined that 23 CFR 750.708 (d) did not conflictwith 23 USC § 131 (d) and was consistent with congressional intent regarding localzoning, stating that "[w]hile each state has authority under 23 USC § 131 (d) to zone areasfor commercial or industrial uses, the actions of a state are not without limitation. A state'szoning must be consistent with the purposes and intent of Congress, and must protect travelersfrom billboards in noncommercial areas" (Alper v State, 96 Nev 925, 928 n 3, 621 P2d492, 494 n 3 [1980]). Though not controlling, we find this reasoning persuasive. We decline tofind that the limitation imposed by 23 CFR 750.708 (b) on state and local zoning authority, aschallenged, is invalid.
Supreme Court properly denied respondents' motion for renewal pursuant to CPLR 2221. Asthe court noted and respondents now concede, the motion pertained to a postjudgment order andtherefore should have been brought pursuant to CPLR 5015 (a) (2). Under either provision,respondents bore the burden of proving that the new evidence they sought to present could nothave been discovered earlier with due diligence and would have led to a different result (seee.g. Cippitelli v County of Schenectady, 307 AD2d 658, 658 [2003] [CPLR 2221];Evergreen Bank v Dashnaw, 262 AD2d 737, 738 [1999] [CPLR 5015]). Respondents didnot meet this burden. The information they sought to present, which they contend would haveclarified, among other things, the property's location in relation to the American Legion Post,was a matter of public record. Respondents offered no reason why it could not have beenpresented at the time of the original application (see Kahn v Levy, 52 AD3d 928, 929-930 [2008]). Further, the newevidence could not properly have been considered because it was not presented to DOT (seeMatter of Rizzo v New York State Div. of Hous. & Community Renewal, 6 NY3d at 110;Matter of World Buddhist Ch'An Jing Ctr., Inc. v Schoeberl, 45 AD3d at 951).
Mercure, J.P., Peters, Malone Jr. and Stein, JJ., concur. Ordered that the judgment isreversed, on the law, without costs, proceeding partially converted to an action for declaratoryjudgment and it is declared that 23 CFR 750.708 (b) has not been shown to be invalid. Orderedthat the order is affirmed, without costs. [See 20 Misc 3d 183.]