In 1998, New York City amended some zoning regulations affecting the Manhattan Theater District. The regulations were designed to curb the destruction of theaters by permitting the transfer of development rights to parcels within the Theater Subdistrict, subject to useable space limitations. (These transfers are referred to as “as-of-right” transfers.) In addition, the amendments permitted the issuance of discretionary permits, by which developers could apply for and receive additional useable space. Consistent with the State Environmental Quality Review Act (SEQRA) and the City Environmental Quality Review (CEQR), the Department of City Planning (DCP) conducted an environmental assessment. The assessment concluded that the amended regulations regarding “as-of-right” transfers would result in no significant impact on the environment, and therefore no environmental impact statement was required. The CPC declined to prepare an environmental assessment with respect to the discretionary, non-“as-of-right” transfers, reasoning that an environmental assessment could be made when an actual application had been filed. A group of citizens (plaintiff) filed suit challenging the adequacy of the environmental assessment and its findings, and alleging that an environmental impact statement should have been prepared. The trial court annulled the regulations and ordered that an environmental impact statement be prepared. The city (defendant) appealed.