Category Archives: Uncategorized

Cuddy & Feder LLP: Deeply Committed to the Continuing Growth of Beacon, NY

Cuddy & Feder LLP is proud to be at the forefront of Beacon’s ongoing development and revitalization efforts. With a deep commitment to the City’s growth, our attorneys have an established record of providing strategic legal guidance on land use, zoning, and development to projects that foster successful and sustainable development and enhance the City’s vibrant community character. We are experienced in navigating the complex approval processes, fostering partnerships with key stakeholders, and offering tailored solutions that support the City’s evolving goals and objectives.

Edgewater Beacon / 246 Market Rate Units + Workforce Housing Units

Cuddy & Feder played a pivotal role in helping Scenic Beacon Developments, LLC, bring the Edgewater project to life – a transformative $50 million multifamily residential development in the City of Beacon overlooking the Hudson River with direct access to Metro-North’s Beacon Train Station. Our team worked alongside developer Rodney Weber from the property’s acquisition through securing critical land use and development approvals, and ultimately closing the construction financing to break ground. The 246-unit waterfront project, which includes 25 affordable workforce housing units, is the largest residential rental development in Beacon in decades and will be a key component in addressing the area’s growing housing needs.

416 + 420 Main Street / Restaurant + Co-Working + Artist Live/Work

Cuddy & Feder obtained Site Plan, Subdivision, and Certificate of Appropriateness approvals from the Planning Board and Special Permit approval from the City Council to construct a four-story mixed-use building fronting on Main Street and one-story artist live/work building at the rear of the property. The mixed-used building will comprise a restaurant on the first floor with commercial office space on the second and third floors, and a penthouse apartment. The project will also include a downtown park with public access.

410 Fishkill Avenue / Carvana Dealership

Cuddy & Feder worked together with both the landlord and tenant to obtain Site Plan and Special Permit Approvals to bring Carvana to Beacon. This project involved the repurposing of the former Healey Brothers Hyundai car dealership for Carvana’s new curbside pickup service. The proposed use faced unique challenges tailored to Carana’s unique operations, including siting loading operations near a State Highway, proximity to Metro-North rail lines and residential properties, recent City infrastructure improvements projects; and lighting, landscaping and pedestrian-oriented goals intended for the stretch of Fishkill Avenue that is the subject of several active planning efforts by the City.

7 + 25 Creek Drive / 54 Multifamily Units + Office Mixed-Use

As part of a public-private partnership, Cuddy & Feder worked with developer Weber Projects, LLC, to secure approvals from Beacon’s City Council, Planning Board and Zoning Board of Appeals to construct two (2) new mixed-use buildings that are now home to 54 multifamily residential units and the headquarters of DocuWare Corporation’s U.S. Headquarters, which properties have immediate access to Beacon’s Main Street and central business district. As part of the public-private partnership with the City, the developer constructed a public park and greenway trail connections located along the Fishkill Creek. Cuddy & Feder assisted the developer from the initial Request for Proposals (RFP) process pertaining to the City’s former Department of Public Works property; through to the closing and the review of environmental considerations for the properties; as well as in connection with negotiations for access and licensing agreements with MTA Metro-North Railroad; and through the construction and permanent financing processes and residential and commercial lease negotiations involving both new buildings.

1113 Wolcott Avenue – Former Reformed Dutch Church / Adaptive Reuse for Hotel + Event Space

Cuddy & Feder secured Site Plan, Special Use Permit, Certificate of Appropriateness and Waterfront Consistency approvals on behalf of Prophecy Theater, LLC, for the former Reformed Dutch Church site located steps from Beacon’s Main Street and Metro-North’s Beacon Train Station. These approvals allow the adaptive re-use of the site for a 30-room hotel, café, and conference center/event space, supported by 33 onsite parking spaces. During the entitlement process, Cuddy & Feder successfully argued for and received a determination from the City’s Building Inspector that the proposed café and conference center/event space constitute accessory uses to the proposed hotel. Cuddy & Feder also obtained a determination from the Building Inspector that the onsite parking was zoning-compliant pursuant to the City’s historic parking exemptions. Concurrently with these efforts, Cuddy & Feder, assisted by a team of consultants, navigated the Planning Board’s robust environmental review and public hearing process on the application, and ultimately secured final approvals after the Planning Board determined that the project will not result in any significant adverse environmental impacts.

393 + 397 Fishkill Avenue / Multifamily Residential + Office

For this mixed-use development, Cuddy & Feder secured approvals for a three-story building that includes 12 residential units, with one below-market-rate workforce housing unit and commercial office space. The success of the project also helped catalyze new planning efforts by the City in and along the Fishkill Avenue corridor (NYS Route 52), which state highway connects the City of Beacon via the Town of Fishkill to Interstate 84 and communities in northern Dutchess County.

536 Main Street / Warp & Weft Retail + Office

Cuddy & Feder obtained Site Plan and Certificate of Appropriateness approvals for the construction of a three-story commercial building on a vacant parcel in downtown Beacon right across from The Roundhouse at the Fishkill Overlook Falls (AKA the Beacon Falls). The new building will host a showroom on the first floor and supportive office space on the second and third floors for Warp & Weft, a New York City-based custom and designer rug curation business. The approved space provides reference to the historic character of Beacon’s Main Street in a minimalistic, modern way through artful façade designs that will enhance visitors’ views and experiences of Warp & Weft’s high-quality, internationally sourced rugs. Cuddy & Feder attorneys oversaw and facilitated the Planning Board’s comprehensive review of the proposal, which included obtaining the Board’s unanimous support for a parking waiver given the amount of available public parking in the immediate surrounding area and the limited parking demand associated with the proposal.

About Cuddy & Feder LLP
Cuddy & Feder LLP proudly serves clients in the areas of real estate; public and private finance (including tax-exempt and taxable bond financing); litigation; land use, zoning & development; telecommunications; cannabis law; energy & environmental; non-profit organizations; and trusts, estates & elder law. For over 50 years, we have established ourselves as the leading law firm serving a vast region that includes Westchester, New York City, Connecticut and the Hudson River Valley. Our foundation is local, and we enjoy enduring relationships with leaders, institutions and decision-makers in the communities we serve.

New York’s LLC Transparency Act – NYS Limited Liability Company Transparency Act

New York’s Limited Liability Company Transparency Act

The New York LLC Transparency Act (Sections 1106, 1107 and 1108, Chapter 34, Section 11, of New York’s Limited Liability Company Law) (Act), has been signed into law and takes effect January 1, 2026. Each non-exempt Limited Liability Company (LLC) formed or qualified to do business in New York will be required to file a beneficial ownership disclosure (BOD) with the New York Department of State (DOS). LLCs that are exempt will still be required to file an attestation of exemption with DOS. The beneficial ownership disclosure will identify the name of each beneficial owner and applicant of the reporting company and include such person’s date of birth, home or business address and an identifying number from a passport or state (or local governmental or tribal authority) issued Driver’s License or ID. The Act uses the same definitions for beneficial owner, applicant and reporting company, as well as exemptions for exempt LLCs, as are in the Federal Corporate Transparency Act.

LLCs formed on or after January 1, 2026 must, within 30 days after formation, either file a BOD with the DOS or, if exempt, file an attestation of exemption with DOS. LLCs formed prior to January 1, 2026 have until 1 year after January 1, 2026 to either file a BOD with the DOS or, if exempt, file an attestation of exemption with DOS.

After the initial filing, each LLC that is a reporting company must file an annual statement with DOS, among other things, updating beneficial ownership disclosure information.

If you have questions or need more information about how the Act affects you or your company, please contact Cuddy & Feder’s Transactional Department.

FTC Noncompete Ban - FTC Final Rule on Noncompete Clauses

Important Update: FTC Final Rule on Noncompete Clauses

On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule banning noncompete clauses in certain employment contracts as an unfair method of competition. This rule is limited to postemployment restraints (i.e. restrictions on what the worker may do after the conclusion of the worker’s employment) and does not apply to in-term restraints (i.e. restrictions on what the worker may do during the worker’s employment).

Effective Date and Enforcement

The final rule will become effective 120 days after its publication in the Federal Register. Employers must comply by refraining from entering into noncompete clauses with workers on or after its effective date. Pre-existing noncompete clauses become unenforceable for workers that do not qualify as “senior executives” under the FTC’s definition. Employers must provide notice to such workers bound to existing noncompete clauses that these clauses are no longer enforceable. The FTC has provided model language to include in such notices.

Exemptions

Non-compete clauses in employment contracts for senior executives that have been entered into before the final rule’s effective date will remain enforceable. The FTC defines “senior executive” as a worker who is in a policy-making position and has a total annual compensation of at least $151,164, annualized if the worker only worked a portion of a year. This exemption is limited, however, to agreements that pre-date the effective date of the rule. The final rule also does not apply to noncompete clauses entered into by a person pursuant to a bona fide sale of a business entity or to entities that the FTC customarily does not have jurisdiction over, such as non-profit organizations, banks, savings and loan institutions, and federal credit unions.

Other Types of Restrictive Agreements

Other types of restrictive employment agreements, such as non-disclosure agreements, non-solicitation agreements, and training repayment agreement provisions (TRAPs), are not categorically prohibited under the final rule. Note, however, that a non-solicitation agreement or TRAP may satisfy the definition of a noncompete clause under the final rule where the agreement or provision functions to prevent a worker from seeking or accepting other work or starting a business after their employment ends.

New York State Laws and Workers Outside the United States

The final rule will preempt New York and other State laws (including State common law, antitrust law, and consumer protection law) that conflict with its terms but will not limit or affect the enforcement of State laws that afford workers greater protections than those provided under the FTC’s final rule. The final rule also does not prohibit employers from using noncompete clauses that restrict work outside the United States.

Potential for Litigation Challenges

It is possible that litigation challenging the FTC’s authority to implement this final rule may delay the effective date. In the event a reviewing court were to hold any part of any provision or application of the final rule invalid or unenforceable, the final rule includes a severability clause clarifying that the remainder of the final rule will remain in effect.

Notice to Employees

Given these restrictions and exemptions, employers should review all existing employment contracts and other documentation to identify applicable noncompete clauses. For those employment contracts that include noncompete clauses for non-exempt workers, the employer should prepare and issue notices using the FTC’s model language as guidance to these workers prior to the final rule’s effective date. Employers should further review any compensation agreements with executive-level workers to determine whether such workers fall under the Federal Trade Commission’s definition of “senior executive.”

Potential Penalties

Employers that violate the final rule may be subject to civil penalties or an injunction if the FTC pursues adjudication of the violation under the FTC Act, or if a States’ attorneys general, other State agency, or individual sues under pertinent state law. Cuddy & Feder’s litigation and transactional departments will continue to monitor further developments in the rule’s enforcement and are available for consultation regarding the scope of the rule and guidance on proper drafting techniques for notices that may need to be issued. If you have any questions or need more information about how this rule affects you or your company, please contact our Litigation Group.

NYS Property Condition Disclosure as of March 20 2024 – PCDA New York

Amendment to the Property Condition Disclosure Act

Effective as of March 20, 2024, New York’s Property Condition Disclosure Act (the “PCDA”), in effect since 2002, no longer permits a seller of residential real estate to opt out of delivering a Property Condition Disclosure Statement (the “Statement”) by giving the Purchaser a $500 closing credit.

The PCDA requires sellers to deliver the Statement which had included forty-eight questions and now, as amended, contains fifty-six questions about the property, covering items from structural issues and mechanical systems to environmental issues and flood related matters. Accordingly, unless exempt, a seller must provide a purchaser with the Statement prior to signing a contract of sale.

Many aspects of the original PCDA remain the same, such as the exemptions and exceptions to the type of transfer where the Statement is required.  Exempt transactions include:

  • A transfer by a fiduciary such as a trustee or executor
  • The transfer of newly constructed property that has never been inhabited
  • A transfer pursuant to a court order.

Transfers of condominium units, cooperative apartments and vacant land are not subject to the PCDA.

The Transactional Department at Cuddy & Feder is ready to help purchasers and sellers navigate the revisions to the PCDA along with any residential transfer matters.

New York State Pro-Housing Communities Program – Hudson Valley prohousing municipalities

New York State’s Pro-Housing Communities Initiative: A Blueprint for Municipal Economic Development in the Hudson Valley

In a region where housing affordability and availability have long been pressing issues, the State’s recent designation of seven Hudson Valley municipalities as Pro-Housing Communities marks a significant step forward in the allocation of economic development funds and incentivizing municipalities to address the affordable housing crisis. The seven recently designated municipalities – Croton-on-Hudson, Kingston, New Rochelle, Newburgh, Poughkeepsie, Red Hook, and White Plains were all designated because their zoning codes encourage housing development and they have a track record of issuing permits for housing growth over the past five years. Each community is one where Cuddy & Feder represents housing developers that have contributed to the diversity of local housing stocks in recent years helping them reach a Pro-Housing Community designation by the State.

Understanding the Governor’s Pro-Housing Communities Initiative

Governor Hochul’s Pro-Housing Communities Program rewards communities that are designated under the program with priority treatment in municipal applications for various state discretionary funding programs. Through this designation, certified communities gain priority access to up to $650 million in funding under the Downtown Revitalization Initiative (DRI), the NY Forward program, the Regional Council Capital Fund, capital projects from the Market New York program, the New York Main Street program, the Long Island Investment Fund (LIIF), the Mid-Hudson Momentum Fund, and the Public Transportation Modernization Enhancement Program (MEP). These State funded programs empower municipalities to plan and implement local economic development initiatives and continue their momentum on the supply of affordable housing.

State funding can be leveraged and even alleviate financial barriers associated with affordable housing development, making projects economically viable.

Opportunities for Developers

For developers, the Pro-Housing Communities designation achieved by a municipality unlocks additional synergies and tools with which to partner with communities gaining access to these additional state funding sources. State funding can be leveraged and even alleviate financial barriers associated with affordable housing development, making projects economically viable. Pro-Housing Community designations require annual updates to the State to remain certified which presents an opportunity to work with municipalities to further streamline the entitlement process, expedite approvals and incorporate complimentary projects into local planning. These types of proactive stances by local governments certainly send the right signals to the investment and development community. They efficiently allow private and public capital to be deployed where appropriate to deliver vibrant communities with varied types of housing and execute on those projects aligned with community needs and priorities.

Navigating the Local Landscape

At Cuddy & Feder LLP, our team is dedicated to helping developers streamline their projects. The Pro-Housing Communities initiative offers municipalities another State tool and source of priority funding to achieve local economic development and pro-housing projects. Whether you’re seeking guidance on land use, zoning and development or negotiating community agreements, we’re here to provide tailored legal solutions in each of the Hudson Valley’s designated Pro-Housing Communities.

 

New York Natural Gas - Affordable Gas Transaction Act - Climate Leadership Community Protection Act

New York State Considering Proposal to Move Away from Natural Gas

Under Section 12 of the New York Transportation Corporations Law, as amended, liquified natural gas providers are required to provide gas lines to any building owner in the State that requests it.1 Under the application of this law, as long as the building is within 100 feet of an existing main, current ratepayers share the associated installation costs. However, recently proposed legislation may reform this longstanding practice, in a push to reduce the State’s reliance on natural gas.

Governor Kathy Hochul incorporated proposed legislation into her released FY 2025 budget proposal. The bill also has the support of 74 sponsors in the State legislature. Now known as the Affordable Gas Transaction Act, it ends the 100-foot “shared cost rule” and the mandate to provide gas to every owner which requests same, in order to enable the State to achieve its energy and sustainability goals as established under the State’s Climate Leadership and Community Protection Act.

If adopted, it will have a notable impact across the State, and in particular in Westchester County, where Con Edison’s natural gas moratorium came to an end as of December 1, 2023.

If adopted, new users will pay for the connections. 2 An exception is made for reconnections to gas mains following interruptions.3 The intent, in part, is to shift households’ demands to electricity, to be powered by renewable energy sources. Notably, Con Edison supports the removal of the 100-foot rule.

The Governor elected to exclude goals to establish energy costs at 6% of a household’s income for moderate and low-income residents, which some legislators are asking to be incorporated. Opposition also exists to the proposed legislation – including from the AFL-CIO and the International Brotherhood of Electrical Workers, which take the position that the State does not have enough access to affordable renewable energy sources; and that the legislation will result in a loss of jobs.4

The proposed legislation aligns with other State initiatives articulated in the budget, including expanding thermal energy networks, which have gained the support of unions and environmental organizations.5 If adopted, it will have a notable impact across the State, and in particular in Westchester County, where Con Edison’s natural gas moratorium came to an end as of December 1, 2023. See “As gas moratorium lifts, Westchester homeowners should consider all energy options,” 6

As the State continues to promote the transition to renewable energy sources through acts such as the Gas Transaction Act, Cuddy & Feder is fully prepared to assist clients in establishing new renewable systems, both site-specific systems and macro-systems providing electricity for users throughout communities. Such efforts will continue to gain importance in light of the legislative proposal to reduce reliance on natural gas. As discussions regarding what energy sources are most sustainable, affordable, and reliable evolve at the State and local level, Cuddy & Feder will continue to advocate for our utility, renewable, and developer clients.

BOI Lawyer - FinCEN Corporate Transparency Act – BOI Reporting

Corporate Transparency Act, FinCEN, BOI Report What you need to know in 30 seconds

If you are an owner of a company, such as a limited liability company or a corporation, you will likely be required to comply with the Corporate Transparency Act, which went into effect on January 1, 2024.

If your company is subject to the Corporate Transparency Act, then you are a “Reporting Company” and you will need to make a determination as to who are the beneficial owners of your Reporting Company. A beneficial owner of a Reporting Company is an individual who either directly or indirectly: (1) exercises substantial control over the Reporting Company; or (2) owns at least 25% of the Reporting Company’s ownership interest.

The BOI Report includes certain identifying information of each beneficial owner such as legal name, date of birth, social security number and home address. Each beneficial owner will also need to provide FinCEN with a copy of his or her government-issued photo identification.

Once you have determined the identity of the beneficial owners of your Reporting Company, you then need to provide the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) with a Beneficial Ownership Information Report (BOI Report). The BOI Report includes certain identifying information of each beneficial owner such as legal name, date of birth, social security number and home address. Each beneficial owner will also need to provide FinCEN with a copy of his or her government-issued photo identification.

The filing deadlines for the BOI Report depend on when the Reporting Company was formed. For all Reporting Companies that were formed before January 1, 2024, each beneficial owner must file a BOI Report by January 1, 2025. For all Reporting Companies that are formed between January 1, 2024 through December 31, 2024, each beneficial owner must file a BOI report within 90 days after the Reporting Company was formed. For all Reporting Companies that are formed on or after January 1, 2025, each beneficial owner must file a BOI Report within 30 days after the Reporting Company was formed. The BOI report can be filed online at https://boiefiling.fincen.gov/fileboir.

If you are unsure whether your company qualifies as a Reporting Company, who qualifies as a beneficial owner or have any questions at all relating to the Corporate Transparency Act, the Transactional Department at Cuddy & Feder LLP is here and ready to help.

Modern Medical Office Space

Office Leasing is Down – So What Else is New? Repurposing Office Space for Medical/Clinical Use

We are all familiar with the negative impact COVID-19 has had on office leasing. However, a silver lining emerges as some landlords explore innovative ways to repurpose vacant office spaces for medical use. In the quest for the right tenant and space, landlords find an opportunity to not only fill vacancies but also command higher rents for spaces in high demand.

Yet, the transition to leasing space for medical use presents its own set of challenges, demanding careful navigation by both landlords and tenants.

Navigating the complexities of leasing for medical use often includes a significant challenge: obtaining a Certificate of Need (CON) from the New York State Department of Health (DOH). Without a CON, the medical-use tenant is legally restricted from providing specific medical services in the new premises. Consequently, the tenant typically seeks a lease contingent upon securing the CON. However, this process entails a considerable amount of time and money. Landlords may find themselves bound by a contingent lease for several months, and in some cases, up to a year or more. Balancing the tenant’s reluctance to pay rent during this period with the landlord’s desire to initiate rent collection sooner demands skillful negotiation and compromise. Crafting a lease structure that accommodates both parties in terms of rent and timing becomes essential in navigating this intricate situation.

The question of who bears this expense becomes a pivotal issue, with both landlord and tenant presenting valid reasons for the other to cover it.

The situation becomes even more complex if the landlord assumes responsibility for constructing the space for the tenant, giving rise to a classic “chicken-and-the-egg” predicament. The issuance of a Certificate of Need (CON) by the Department of Health (DOH) is contingent upon the approval of final construction drawings for the new premises. Consequently, the tenant relies on these drawings to satisfy the CON contingency. However, obtaining a building permit is another hurdle, requiring the same set of construction drawings. This sets up a dilemma for the landlord, who needs these drawings to fulfill their obligation of building the space for the tenant. Adding to the complexity is the cost associated with these construction drawings. The question of who bears this expense becomes a pivotal issue, with both landlord and tenant presenting valid reasons for the other to cover it. To navigate this intricate web of challenges, the involved parties must enlist the support of an experienced legal team. Their guidance is indispensable in negotiating and devising solutions that cater to the interests of both sides.

Thomai (Amy) Natsoulis, partner at Cuddy & Feder LLP, has assisted both landlords and tenants in successfully resolving the issues that frequently arise in negotiating leases for medical space, including the above, in order to successfully and efficiently get to the point where the parties can execute a lease of space for medical use. Should you have any questions or need guidance on your leasing needs, our team is here to help.

Climate Leadership and Community Protection Act (CLCPA) – New York Disadvantaged Communities

New York’s Emerging Climate Protections for “Disadvantaged Communities”

In the four years since New York State enacted the Climate Leadership and Community Protection Act (CLCPA),1 representatives from both state agencies and environmental justice communities have commenced a coordinated effort to establish protections and aid communities facing environmental hardships and climate risks. To prioritize the safety and health of these disadvantaged communities (DACs), CLCPA Section 7(3) requires state agencies to analyze and consider impacts to DACs when issuing permits.2 The NYSDEC has recently released a draft policy guidance document, DEP 23-1, outlining the applicability and requirements of a DAC analysis.3

Identifying Disadvantaged Communities

Disadvantaged communities are broadly defined as “communities that bear burdens of negative public health effects, environmental pollution, impacts of climate change, and possess certain socioeconomic criteria, or comprise high-concentrations of low- and moderate- income households.”4

The CLCPA established the Climate Justice Working Group (CJWG) to determine specific criteria used to determine whether a census tract qualifies as a DAC. Current CJWG members include environmental justice community representatives from across the state and representatives from several state agencies.5 This Group finalized its DAC criteria on March 27, 2023, following its release of the draft criteria on December 13, 2021, and response to public involvement and feedback throughout 2022.6 The adopted criteria is not static; the CJWG remains responsible for annually reviewing and modifying it as needed to incorporate new data and scientific findings.7

The DAC criteria is split into two general categories: the environmental burdens or climate change risks within a community, and population characteristics and health vulnerabilities that can contribute to more severe adverse effects of climate change.8 Several indicators are provided for each category, including land use and facilities associated with historical discrimination or disinvestment, potential pollution exposure, income, race and ethnicity, health outcomes, and housing mobility.9

New York’s draft policy DEP 23-1 demonstrates a significant commitment to environmental justice by prioritizing the well-being of Disadvantaged Communities (DACs), mandating heightened permit reviews, and emphasizing public participation for a more equitable and sustainable future.

Percentile ranks of each indicator by category are combined to measure a census tract’s level of risk and characteristics relative to other tracts.10 Tracts with scores higher than tracts statewide were then identified as DACs, resulting in 35% now identified as DACs.11

The State has provided several interactive mapping resources that assist in identifying DACs.12 These maps demonstrate that 44% of the census tracts in the Mid-Hudson region, for instance, are DACs.13

Implementing CLCPA Section 7(3): NYS DEP 23-1

The New York State Department of Environmental Conservation (NYSDEC) recently issued a draft policy document providing state agencies with guidance expounding on the CLCPA’s requirement to consider impacts to and prevent disproportionate burdens on DACs.

This guidance provides that CLCPA 7(3) would apply to major permit applications and modifications or renewals of existing permits involving water withdrawal for cooling purposes, air pollution control, liquefied natural gas and petroleum gas, solid waste management, and industrial hazardous waste management.14 This heightened level of review would also apply to permits administered under the Uniform Procedures Act (UPA) for projects involving energy production, generation, transmission or storage facilities; projects with “sources and activities that may result in GHG emissions or co-pollutants, indirectly or directly”; and non-UPA facility registrations related to the major permits listed above “where DEC determines an analysis is necessary or appropriate to ensure CLCPA consistency such as projects with significant GHG or co-pollutant emissions”.15 The meaning of directly or indirectly and significant are not discussed in the draft policy.

Disproportionate Burden Reports

The requirements of DEP 23-1 will apply to these permit types if the project is located within or likely to affect a DAC.16 Once an affected DAC is identified, an applicant and the reviewing agency will determine whether a disproportionate burden report is required. If the project will result in increases in GHG emissions or co-pollutants associated with any emission sources “directly related to and essential to” the project, an applicant must prepare a report. The report must identify and address any burdens placed on the DAC. These burdens include any GHG or co-pollutant emissions from the project, public health stressors resulting from any emissions, project contribution to existing pollution burdens, design considerations to reduce of eliminate any burdens, and project benefits. Upon completion, the report must be made available for public review and comment in accordance with UPA procedures. Relevant comments will be considered by the agency, along with all application materials, when issuing a final decision.

Enhanced Public Participation

Regardless of whether a disproportionate burden report is required, if the project is located within or likely to affect a DAC, an applicant must also conduct enhanced public participation measures. The relevant procedures are outlined within NYSDEC’s Commissioner Policy 29 (CP-29).17 This Policy requires an applicant to implement and certify a public participation plan, which will include identification of key stakeholders, distribution of application materials to the public, hosting public informational meeting(s), and a report summarizing these efforts and all public concerns raised during the process.18 In addition to these CP-29 requirements, applicants for projects involving DACs must also engage with members of the public regarding design considerations and potential benefits of the project. The PPP and engagement will be assessed by the reviewing agency when making a decision on the permit application.

DEP-23-1 is available for comment until November 27, 2023.19

AI and Legal Ethics – Law Firm AI Policy – Ethics of Lawyers Using ChatGPT

The Attorney’s Ethical Obligations When Using AI

The original version of this article was published in the July 28, 2023 edition of the New York Law Journal.

Since its public debut in late 2022, ChatGPT has garnered widespread acclaim for its fast response generation, contextual understanding, and relaxed tone that simulates human speech. The legal industry, like many others, has recognized the potential of artificial intelligence technologies such as ChatGPT to revolutionize legal research, contract review, and client communication. However, the incorporation of AI in the practice of law brings with it a set of ethical challenges that attorneys must consider and carefully weigh. While AI tools like ChatGPT offer remarkable capabilities, they are no substitute for human judgment, opinions, and emotional intelligence—all of which remain vital for achieving the best results for clients. ChatGPT’s efficiency in automation comes with a set of potential risks and ethical concerns that must not be ignored.

First and foremost, attorneys have an absolute duty to provide competent representation to their clients. 1 That “competent representation” requires not just legal knowledge and skill, but also thoroughness and reasonable preparation necessary for the representation. 2 Anyone, whether lawyer or no, can plug a few directives into an AI tool like ChatGPT and use the results in place of their own work. But lawyers owe a greater duty to their clients than that: we must evaluate the ChatGPT response for accuracy, check to ensure any cited authority is still good law, and tailor the response to fit not just the facts of the case at issue, but also the audience that will read it. Anything less would fall short of the thoroughness and reasonable preparation requirements of the New York Rules.

While ChatGPT has enormous potential to increase attorney efficiency, there remain serious ethical quandaries with the use of artificial intelligence work. Attorneys must be mindful of these potential pitfalls while using AI software and should only use it as the helpful tool it is meant to be, not as a replacement for thoughtful work product.

Nor is ChatGPT as reliable as it seems at first blush. Attorneys using ChatGPT must always make certain to double-check the AI response’s accuracy, lest they find themselves in hot water with the court—and shortly thereafter, their clients. Indeed, overreliance on ChatGPT’s accuracy has already led to sanctions for two New York attorneys, where the AI tool simply made up cases to support a legal argument the attorneys then attempted to advance before the Honorable Kevin Castel of the United States District Court for the Southern District of New York.3 Needless to say, things did not go well for the attorneys in question.4 In his June 22, 2023 decision upholding monetary sanctions against the attorneys’ clients and their firm under Rule 11 of the Federal Rule of Civil Procedure, Judge Castel wrote, “The filing of papers without taking the necessary care in their preparation is an abuse of the judicial system that is subject to Rule 11 sanction. . . . An attempt to persuade a court or oppose an adversary by relying on fake opinions is an abuse of the adversary system.” Mata v. Avianca, — F. Supp. 3d —, 2023 WL 4114965, at *11-12 (S.D.N.Y. June 22, 2023) (citations and internal quotations omitted). The Court ultimately held that the attorneys, in using and relying upon ChatGPT in lieu of their own research, acted with “subjective bad faith in violating Rule 11[.]” Id. at 15. And Judge Castel made clear that the $5,000 fine meant the attorneys in question were getting off lightly for their actions:

In considering the need for specific deterrence, the Court has weighed the significant publicity generated by Respondents’ actions. The Court credits the sincerity of Respondents when they described their embarrassment and remorse. The fake cases were not submitted for any respondent’s financial gain and were not done out of personal animus. Respondents do not have a history of disciplinary violations and there is a low likelihood that they will repeat the actions described herein. . . . [But the] Court will require Respondents to inform their client and the judges whose names were wrongfully invoked of the sanctions imposed. The Court will not require an apology from Respondents because a compelled apology is not a sincere apology. Any decision to apologize is left to Respondents.

Id. at 17. Mata may well have been the first case of its kind on the subject of thoughtless reliance on AI tools in the legal field, but it surely will not be the last. In the wake of such a highly-publicized case as Mata, it is safe to assume that no future court will be so lenient going forward.

Even setting aside such blind faith in artificial intelligence as the attorneys in Mata displayed, perhaps the most significant ethical pitfall inherent in the use of AI tools such as ChatGPT is the risk to client confidentiality. A primary ethical obligation of an attorney to their clients is to maintain client confidentiality, including protecting client information from unauthorized disclosure.5 And using ChatGPT can pose a critical risk that such information may be exposed. ChatGPT chat history is accessible and reviewable by ChatGPT employees,6 which may effectively waive attorney-client privilege. Similarly, OpenAI—the company behind ChatGPT—may provide personal information (including client-identifying information) to third-party vendors and affiliates, heightening already-serious ethical concerns over data security and privacy.7 Even if ChatGPT kept all chat history entirely private, that would not guarantee its security: a recent data breach made public nearly 1.2% of all chat history of ChatGPT Plus subscribers.8

Again, there is no question that ChatGPT—like other, similar AI tools—has the potential to revolutionize the legal field. But it is not a one-for-one substitute for human attorney work product and should not be treated as such. While ChatGPT has enormous potential to increase attorney efficiency, there remain serious ethical quandaries with the use of artificial intelligence in legal work. Attorneys must be mindful of these potential pitfalls while using AI software and should only use it as the helpful tool it is meant to be, not as a replacement for thoughtful work product.

*Reprinted with permission from the July 28, 2023 edition of the New York Law Journal© 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.