East Lyme ― A New York businessman barred by court order from engaging in development in town is suing the Inland Wetland Agency because of a change in regulations he said deprives him of the ability to develop his land.

Robert Blatt was among a group of developers known as New England National who in 2015 accepted a $650,000 payoff from the town in exchange for agreeing not to buy land, file permit applications or “otherwise engage in development” in East Lyme for 20 years. The agreement was a move to end more than a decade of litigation over development around Darrow Pond that by then had cost the town more than a half million dollars.

The settlement agreement which prohibits Blatt from engaging in development “directly or indirectly, under any circumstances or conditions whatsoever” was also signed by Jeffrey and Anne Torrance of East Lyme as the principals of entities including Niantic Real Estate LLC.

By 2020, Blatt identified himself as the sole member of Niantic Real Estate LLC when he sued the wetlands agency after its members expanded the upland review area from 100 feet to 300 feet of any wetlands or watercourses. The case is pending.

The agency is responsible for regulating, but not prohibiting, activity in the upland review area to ensure development will not have adverse impacts on the town's surface water.

The Inland Wetlands Agency in 2020 scaled back an initial proposal to extend the upland review area to 500 feet after multiple public hearings yielded divided opinions. Some described the change as a threat to development and burdensome to homeowners and town staff, while others argued efforts to preserve the town’s sensitive drinking water supply should outweigh those concerns

Agency members mulling the 500-foot review area were warned repeatedly by town attorney Mark Zamarka that the change would likely be appealed in court. They then approved the 300-foot compromise by a vote of 5-2.

Blatt in a phone call Thursday said the settlement agreement “has nothing to do” with his legal challenge of the wetland agency decision.

Pressed on whether suing the town over its wetland regulations is an example of the kind of engagement prohibited in the settlement agreement, he said that’s a legal question.

“And the lawyers will deal with it one way or another,” he said.

First Selectman Kevin Seery on Thursday referred questions about whether Blatt’s level of involvement in development is acceptable under the agreement to the wetland agency’s attorneys from the Hartford-based Robinson+Cole firm.

Seery acknowledged raising the question with the attorneys when the firm was retained to defend the wetland agency but said “nothing’s come back yet” in terms of an answer.

“The town’s concerns have been conveyed to our counsel,” he said. “We’re not saying it’s a violation. We’re just making sure counsel is aware of the concern. And that’s all it is, a concern.”

John Casey of Robinson+Cole did not respond by press time to a request for comment.

Under the settlement agreement, New England National also agreed to convey eight acres of Darrow Pond to the town and release all of the easements it controlled on the town's Darrow Pond property, which was purchased from Webster Bank in foreclosure for $4.1 million. Part of the open space is now being turned into a park.

Blatt also has ties to a high-profile property on Lake Pattagansett that has been in the news for the past two years, ever since it was first pitched to town officials for purchase for $1.65 million. Blatt at the time held the mortgage on the property, which was bought by Hathaway Farm LLC for $1.05 million in June 2021.

Town attorney Mark Block has cited attorney/client privilege when refusing to comment on whether Blatt’s involvement in the Hathaway property violated the 2015 settlement agreement.

The East Lyme Land Trust in September of last year took ownership of the site’s 120 pristine, aquifer-heavy acres for $2.3 million. The seller, Hathaway Farm, now holds the mortgage, with the land trust’s share of a vaunted preserve in the Oswegatchie Hills used as collateral.

The move drew the ire of conservationists and some land trust donors who feared the loss of the collateral properties, sparking an investigation by the state Office of the Attorney General.

Anthony Novak, the Manchester-based attorney representing Blatt in his lawsuit against the wetlands agency, also represents the land trust.

The Board of Selectman has been meeting behind closed doors for months as members discuss negotiations with the land trust to purchase the Hathaway property and the land being used as collateral.

e.regan@theday.com