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Appeal on disqualification of lawyer challenges ESDC business as usual

In some ways, the development game seems rigged--but perhaps the state's highest court will rework the rules.

The Empire State Development Corporation (ESDC) has the dual and potentially-conflicting roles of encouraging economic development and evaluating the environmental impact of such development. When it comes to the Atlantic Yards project, ESDC chairman Charles Gargano has already said the scale meets his approval.

After some 15 project opponents and other allies challenged the ESDC's use of attorney David Paget, who had just previously represented developer Forest City Ratner on the Atlantic Yards project, Supreme Court Justice Carole Edmead 2/14/06 removed him from the case, decrying a "severe, crippling appearance of impropriety."

Appellate reversal

The ESDC appealed, and the Appellate Division, however, was unanimous in its reversal of Edmead, ruling 5/30/06 that the representation was consecutive, not simultaneous (as Edmead had erroneously said); that ESDC and/or the developer had waived their rights as to potential conflicts of interest; and that any appearance of impropriety is insufficient and must be balanced against other factors.

What are those factors? The court wrote:
First, petitioners have recourse, as noted above, to provide input into and, if necessary, to obtain judicial review of ESDC's determination. Second, as previously noted, Paget is ESDC's counsel of choice for numerous excellent and undisputed reasons, and replacing such counsel on short notice would be very difficult. Third, it seems clear that petitioners intended the disqualification motion as a significant tactical maneuver in their campaign against the Project.

What's missing

What's missing is the larger picture, one that Edmead identified. She wrote in her decision:
Potentially, the interests of Ratner Companies, as an applicant or project sponsor, are adverse to the interests of the ESDC, which is charged with the responsibility to protect the environment and regulate the activities of individuals and corporations so that 'due consideration is given to preventing environmental damage.' The oft bottom-line, profit-making pursuits of real estate development corporations may not necessarily align with the stated, valid environmental interests of the ESDC.

Now, an appeal filed this week by Develop Don't Destroy Brooklyn and copetitioners asks the Court of Appeals (the state's highest court) to take another look. The appeal argues that the Appellate Division, by applying the principles governing private parties (and allowing Forest City Ratner to waive any conflict with ESDC), ignored the public interest:
Where, as petitioners allege here, a government agency puts other interests ahead of its duty to serve the public interest, it is the public, not the agency, that is harmed.

Further, it raises questions about the ESDC's review process, under SEQRA, the State Environmental Quality Act. The Appellate Division's opinion stated that the petitioners did not have standing to challenge Paget's role, but they could challenge the overall ESDC environmental review later in the process. But the appeal brief, filed by Jeffrey Baker, says that's not enough:
Given ESDC's "considerable latitude" under SEQRA to determine how or whether to mitigate the substantial environmental impacts of the Project, ESDC's likely invocation of the attorney-client privilege in any such challenge, and the deferential standard of review in an Article 78 proceeding, it would be extremely difficult, if not impossible, once the process is complete, to parse out how the involvement of an attorney with conflicted loyalties affected the ultimate result.

Will the Court of Appeals step in?

The Court of Appeals is not obligated to take the case. Baker's brief cites the role of the New York Public Interest Research Group, which joined the case as an amicus but has no stated position on the Atlantic Yards project, as evidence that the issue has broad public importance.

The court would have to address some fundamental problems with the law. As Mary Campbell Gallagher, who writes the Big City Big Boxes blog, put it in March:
The real problem is with the environmental statutes, which in effect put the fox-developers in charge of the state environmental henhouse. As counsel for the state pointed out yesterday, the statute permits the developer to draft his own environmental impact statement (EIS). The EIS, however, is what the entire environmental regulatory process must examine. Although counsel for the state would doubtless not put it this way, we have environmental statutes that in their very nature positively require a conflict of interest. To enforce the statutes as drafted means to put the developer in control of the state process that is supposed to regulate him. No wonder, then, that in allowing Mr. Paget and his clients to follow the statute, it sounds to a layperson as though there is a conflict of interest.


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