Agency of Natural Resources v. Godnick

ANR_V_GODNICK.94-057; 162 Vt. 588; 652 A.2d 988


[Filed:  21-Oct-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports. 
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609- 0801 of any errors in
 order that corrections may be made before this opinion goes to press. 
 
 
                                   No. 94-057
 
 
 Agency of Natural Resources                     Supreme Court
 State of Vermont                                
                                                 On Appeal from
      v.                                         Environmental Law Division
 
 Edward M. Godnick                               September Term, 1994
     
   
 Merideth Wright, J.
 
 Jeffrey L. Amestoy, Attorney General, and Conrad W. Smith and Ron Shems,
   Assistant Attorneys General, Montpelier, for plaintiff-appellee
 
 Edward R. Seager and Bernard J. Boudreau of Edward R. Seager, P.C.,
 Rutland, for defendant-appellant 
 
 
PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   Defendant Edward Godnick appeals a $10,270 penalty
 assessed by the Environmental Law Division (ELD) pursuant to the
 administrative penalty provisions of the Uniform Environmental Law
 Enforcement Act, 10 V.S.A.  8001-8018, enacted in 1989. Plaintiff, the
 Vermont Agency of Natural Resources (ANR), cross-appeals, charging that the
 ELD failed to assess a penalty for the first year of defendant's violation
 and erroneously evaluated the statutory criteria in determining the
 penalty.  We affirm the ELD's calculation of the penalty, but remand for a
 determination of penalties for the first year of violation. 

      In August of 1987, defendant purchased a parcel of land on Route 7 in
 Rutland for the 

 

 purpose of building a furniture warehouse.  The site contained a highway
 right-of-way held by the Vermont Agency of Transportation (AOT).  Before he
 bought the property, defendant received a letter from the District AOT
 office informing him that the use of highway right-of- way on the site was
 subject to AOT guidelines.  The letter, evidently in response to
 defendant's inquiry, stated that plantings in the right-of-way must not
 interfere with sight distances or highway maintenance activities.  While
 pursuing his purchase of the property, defendant applied to the District I
 Environmental Commission (Commission) for an Act 250 land use permit to
 allow construction of the warehouse.  The permit was granted, but it
 reserved the Commission's right to impose additional conditions when the
 buildings and grading were complete. 

      The completed warehouse did not conform to the plans approved by the
 permit. Concerned about the visual impact of the warehouse along Route 7,
 the Commission informed defendant that he would have to submit a revised
 landscaping plan to achieve the same screening results as those originally
 approved.  Defendant submitted a revised plan, and although this plan
 depicted plantings in the right-of-way, it made no reference to the AOT
 guidelines.  Defendant did not seek AOT approval until after the Commission
 approved the plan.  On June 23, 1989, the Commission issued an amended Act
 250 permit requiring defendant to make plantings which would screen the
 visibility of the warehouse from the highway, and set October 1, 1989, as
 the deadline for implementing the plan. 
 
       When AOT received the revised plan in the amended Act 250 permit, it
 instructed defendant not to plant within the right-of-way without its
 approval and notified the Commission of the conflict.  Defendant tried to
 arrange a meeting in which AOT and the Coordinator of the District
 Commission could discuss the conflict, but the Coordinator was unable to
 attend.  On 



 September 27, 1989, AOT sent defendant a letter stating that  the
landscaping plan must be redesigned to meet AOT's highway right-of-way 
guidelines. 

      Despite the October 1, 1989 deadline for implementing the landscaping
 plan, this AOT letter marks the last time that defendant communicated with
 either the Commission or AOT until June of 1992, when the ANR initiated
 enforcement action against him.  Between October 2, 1989 and October 14,
 1992, a period of three years, defendant did no landscaping on the site
 except to plant grass.  Finally, in 1992, defendant submitted an
 application for a further amendment to address the landscaping concerns of
 the District Commission within AOT requirements.  This application was
 approved by both AOT and the Commission.  The Commission issued the further
 amended permit on October 14, 1992, and, consequently, defendant was in
 compliance on that date.  During the following month, defendant completed
 the required landscaping at a cost of $10,000. 
 
       In December of 1992, the Secretary of the Vermont Agency of Natural
 Resources issued an administrative order pursuant to 10 V.S.A.  8008
 and 8010 imposing penalties for violations of the amended permit between
 October 2, 1989 and October 14, 1992.  Defendant appealed the
 administrative order to the ELD.  Although the ELD concluded that defendant
 was in violation during the three-year period, it imposed a penalty for
 only the last year of violation calculated to equal the amount of economic
 benefit defendant gained. 
 
       On appeal, defendant argues that the ANR is estopped from issuing an
 administrative order, and that the ELD erred in its assessment of penalties
 against defendant.  On cross-appeal, ANR argues that the ELD's assessment
 of penalties was improper because it failed to impose penalties for the
 first year of violation, and failed to apply the penalty criteria of the
 statute. 

 

 We consider first defendant's estoppel argument, and then will review the
 ELD's calculation of the penalty. 

      Defendant argues that the Secretary is estopped from issuing the
 administrative order because defendant's noncompliance stemmed directly
 from the conflicting directions of the Commission and AOT, and that the
 Commission never advised him of his obligation to resolve this conflict. 
 Defendant argues that the Commission's silence about the conflict implied
 that it would resolve the problem with AOT and would so notify defendant. 
 We affirm the conclusion of the environmental law judge that estoppel is
 inappropriate in this case. 
 
       The doctrine of equitable estoppel "is based upon the grounds of
 public policy, fair dealing, good faith, and justice."  Dutch Hill Inn,
 Inc. v. Patten, 131 Vt. 187, 193, 303 A.2d 811, 815 (1973).  The party
 asserting estoppel has the burden of establishing: (1) the party to be
 estopped must know the facts; (2) the party to be estopped must intend that
 its conduct shall be acted upon, or the conduct must be such that the party
 asserting estoppel has a right to believe it is intended to be acted upon;
 (3) the party asserting estoppel must be ignorant of the true facts; and
 (4) the party asserting estoppel must detrimentally rely on the conduct of
 the party to be estopped.  Fisher v. Poole, 142 Vt. 162, 168, 453 A.2d 408,
 411-12 (1982). Estoppel against the government is rare; it is appropriate
 only when the injustice that would ensue from a failure to find an estoppel
 sufficiently outweighs any effect upon public interest or policy that would
 result from estopping the government in a particular case.  In re
 McDonald's Corp., 146 Vt. 380, 383, 505 A.2d 1202, 1203-04 (1985). 

      The ELD found that defendant failed to meet the third element of
 estoppel, and we agree. Defendant knew that he faced an October 1, 1989
 deadline and that the conflict between permit 

 

 requirements and those of AOT were not resolved as of that date.  The
 question of who had to resolve the conflict is not a "fact" for purposes of
 the estoppel elements.  See In re Conway, 152 Vt. 526, 531, 567 A.2d 1145,
 1147 (1989) (no estoppel where Act 250 applicants knew that they had to
 give notice to all adjoining property owners, but failed to do so,
 allegedly relying upon the District Coordinator's advice that such notice
 was not required).  Thus, defendant was cognizant of the true facts. 

      We also emphasize that consistent with the requirement of good faith,
 estoppel will not be invoked in favor of a party "`whose own omissions or
 inadvertence contributed to the problem.'"  Id. (quoting Bennington v.
 Hanson-Walbridge Funeral Home, Inc,, 139 Vt. 288, 294, 427 A.2d 365, 369
 (1981)).  Defendant's nonfeasance contributed significantly to the
 prolonged period of noncompliance.  Defendant took no action to develop a
 landscaping plan which would satisfy the requirements of both the
 Commission and AOT.  By doing nothing to resolve the conflict, defendant
 remained in noncompliance for three years despite his obligation to ensure
 that his project complied with all relevant regulations.  Defendant failed
 to act in good faith, and estoppel, an equitable remedy, is inappropriate
 in such circumstances. 
 
      Both parties contest the civil penalty imposed by the ELD, but for
 different reasons.  The ELD concluded that defendant violated Act 250
 during the three-year period between October 2, 1989 and October 14, 1992. 
 It assessed a penalty of $10,270, representing economic gain for one year
 of the three-year violation.  It decided not to impose any penalty under 10
 V.S.A.  8010 for violations which occurred before the statute took
 effect, and for the approximately eleven-month period after November 2,
 1990, when the Secretary failed to pursue the violation, concluding this
 delay in enforcement was so unreasonable that full mitigation of the
 penalty for 

 

 that period was warranted.  On appeal, defendant argues that it  was error
 for the ELD to assess any penalty.  Conversely, on cross-appeal,  ANR
 contends that it was error for the ELD not to apply administrative  penalty
 provisions retrospectively, that the ELD erred in concluding that  the
 delay was unreasonable and in completely mitigating the penalty during 
 this period, and that the ELD failed to make specific findings on all the 
 statutory penalty criteria of  8010(b). 

      We begin with the challenge to the failure to impose a penalty for
 the first year of violation.  ELD concluded that the imposition of
 administrative penalties for this year constituted an impermissible
 retrospective application of 10 V.S.A.  8008 and 8010 because the
 Secretary's power to determine penalties did not arise until November 2,
 1990, when the environmental law judge was appointed.  See 1989, No. 98, 
 6 (provisions of Uniform Environmental Law Enforcement Act authorizing
 Secretary to assess penalties "shall not take effect until the rules
 required by section 8016 of Title 10 have been adopted and an environmental
 law judge has been appointed"). 
 
      In reviewing this determination, we emphasize three points about the
 statutory scheme. First, the Uniform Environmental Law Enforcement Act was
 effective on July 1, 1989 although certain sections had delayed effective
 dates.  Section 8008 states that "[t]he secretary may issue an
 administrative order when the secretary determines that a violation
 exists," 10 V.S.A.  8008, and  8010(a) provides that "[a]n
 administrative penalty may be included in an administrative order issued
 under section 8008 of this title."  10 V.S.A  8010.  Although the delayed
 effective date of these sections precluded the Secretary from issuing
 administrative orders and imposing penalties prior to the effective date,
 nothing in the language suggests that the Secretary was completely
 precluded from administratively enforcing any violations which 

 

 occurred before this time. 

      Second, we are dealing here with the ELD's power to impose a penalty
 under  8012(b)(4), a section which did not have a delayed effective date.
 Third, the alternative choice for imposition of civil penalties was an
 independent action in superior court.  10 V.S.A.  8221. The Uniform
 Environmental Law Enforcement Act increases civil penalties and requires
 the superior court to use the penalty assessment factors of  8010. 
 Section 8221 did not have a delayed effective date. 

      We agree that Vermont statutory law and case law normally prohibit
 retrospective application of new and amended statutes.  State v. Willis,
 145 Vt. 459, 466, 494 A.2d 108, 112 (1985); 1 V.S.A.  213, 214. 
 Retrospective laws are defined as "`those which take away or impair vested
 rights acquired under existing laws, or create a new obligation, impose a
 new duty, or attach a new disability in respect to transactions or
 considerations already past.'" Carpenter v. Vermont Department of Motor
 Vehicles, 143 Vt. 329, 333, 465 A.2d 1379, 1382 (1983) (quoting Barbieri v.
 Morris, 315 S.W.2d 711, 714 (Mo. 1958)).  A statute is not retrospective,
 however, when it merely relates to prior facts or transactions but does not
 change their legal effect.  Id. 

      Carpenter is instructive because the issue was similar.  A Vermont
 statute imposes a license suspension sanction for failure to submit to an
 alcohol breath test when requested; the length of the suspension increases
 if there have been past refusals.  The plaintiff in Carpenter faced a
 six-year suspension for a third refusal and argued that the earlier
 refusals could not be considered because they occurred before the effective
 date of the statute increasing the period of the license suspension when
 there have been past refusals.  Applying the definition stated 

 

 above, we disagreed that the statute was being applied retrospectively or
 retroactively because the triggering event occurred after the new statute
 was effective.  Id.; see also Erno v. Commissioner of Motor Vehicles, 156
 Vt. 62, 65-66, 587 A.2d 409, 412 (1991) (statutory amendment had no impact
 on prior conviction absent a new action which triggered the new rule). 

      Here, the violation went beyond the period in issue so there is no
 question that the Secretary could impose penalties under  8010 and that
 the ELD could order penalties under  8012(b)(4).  The sole question is
 the amount of the penalties.  As in Carpenter, we do not believe it is
 improper to consider past conduct in determining the extent of the
 violation. 

      Further, the issue is not whether defendant would escape penalties
 for the year in question, but how those penalties will be imposed and
 enforced.  The Secretary could have brought an action in superior court for
 civil penalties under  8221, and the superior court would have used the
 identical factors in computing the civil penalty.  In fact, the maximum
 amounts allowed in an administrative penalty are less than those that could
 be imposed by the superior court.  Compare 10 V.S.A.  8010(c) ($25,000
 penalty for each violation) with id.  8221(b)(6) ($50,000 penalty for
 each violation).  Thus, defendant had fair notice that the violations would
 be subject to enforcement under the Act; the differences in method of
 enforcement are basically procedural.  Statutory changes that are
 procedural in nature, as opposed to those that affect preexisting rights
 and obligations, may be applied retrospectively.   Myott v. Myott, 149 Vt.
 573, 575-76, 547 A.2d 1336, 1338 (1988).  The administrative scheme
 involved here imposes no new liability on defendant.  Enforcement
 efficiency may have improved under an improved procedural framework, but
 defendant has no preexisting right in a less efficient enforcement 

 

 scheme as long as the same substantive standards are used. 

      Finally, we think the ELD decision leads to an unreasonable result
 unintended by the Legislature.  See Vermont Agency of Natural Resources v.
 Riendeau, 157 Vt. 615, 620, 603 A.2d 360, 362-63 (1991) (court will
 construe statue to avoid unreasonable result).  Under the ELD's
 construction, the Secretary is required to bring an action in superior
 court for the first year of violation, but may issue an administrative
 order imposing administrative penalties for the subsequent two years of
 violation.  Severing prosecution of the first year of violation from the
 second and third would result in the inefficient duplication of
 adjudication by the superior court and the ELD.  It would also be
 unreasonable to require defendant and the State to bear the costs of
 litigating different periods of a continuous violation in two different
 courts. 

      The remaining issues deal with the ELD's application of the criteria
 for determining the amount of penalties set forth in  8010(b) to this
 case.  Defendant argues that the ELD erred in imposing any penalty given
 mitigating circumstances.  In the alternative, he argues that the ELD erred
 in calculating the amount of economic benefit gained from the violation. 
 On cross-appeal, ANR contends that it was error to mitigate the penalty for
 the last year because any delay in enforcement was not unreasonable.  In
 addition, ANR argues that the ELD erred in failing to apply all eight of
 the penalty criteria of  8010 and, in particular, the need for
 deterrence. Because these issues will recur on remand, we consider them. 

      The ELD has the authority to determine whether a violation occurred
 and to review and completely redetermine the amount of any penalty.  10
 V.S.A.  8012(b)(1), (4).  The Act lists eight factors that the ELD must
 consider in determining the amount of the penalty, 10 V.S.A. 8010((b),
 but it does not require that separate amounts be imposed under each factor.

 

 Vermont Agency of Natural Resources v. Duranleau, 159 Vt. 233, 239, 617 A.2d 143, 147 (1992). 

      One of the factors the ELD must consider in assessing a penalty is
 "the presence of mitigating circumstances, including unreasonable delay by
 the secretary in seeking enforcement." 10 V.S.A.  8010(b)(2).  Although
 defendant was in violation of his permit as of October 1, 1989, the
 District Coordinator did not pursue voluntary compliance efforts, and the
 initial enforcement order was not issued until June of 1992.  The ELD
 concluded that "the Secretary's refraining from issuing an order in the
 planting season of 1991 was an unreasonable delay," which required
 mitigation of the penalty for that period.  On the other hand, the ELD
 found that defendant's failure to develop a plan that would have satisfied
 both agencies or to begin the landscaping outside the right-of-way
 precluded a finding of attempted compliance as a further mitigating factor.

      The findings are not clearly erroneous and do support the ELD's
 conclusions regarding mitigating factors.  The Act provides the ELD with
 the discretion to determine how any mitigating circumstances found should
 affect the amount of the penalty imposed as long as its assessment is not
 unreasonable.  Duranleau, 159 Vt. at 239-40, 617 A.2d  at 147.  Accordingly,
 defendant's argument that the ELD failed to adequately consider mitigating
 factors is unavailing. Moreover, we do not agree with ANR's contention on
 cross-appeal that the ELD abused its discretion in applying the mitigating
 circumstances factor to eliminate penalties for eleven months of
 unreasonable delay. 

      Another penalty criteria the ELD must consider is the economic
 benefit gained from the violation.  10 V.S.A.  8010(b)(5).  Defendant
 argues that he received no economic benefit from 

 

 the use of the warehouse while he was in noncompliance.  The ELD found that
 defendant received two types of economic benefit from the violation.  He
 leased warehouse space to another business he owned and received $9,070 in
 rental income; and he gained $1,200 by waiting until 1992 to complete
 $10,000 worth of landscaping.  Both of these items were supported by the
 evidence.  Although the rent was paid from one of defendant's businesses to
 another, equivalent warehouse space in the area would have cost $9,000, and
 therefore defendant saved this amount by not paying elsewhere for warehouse
 space.  As a direct result of his noncompliance, defendant had the use of
 monies which should have been spent on landscaping in 1989.  The ELD used a
 12% interest rate over a one-year period to estimate defendant's avoided
 cost.  We agree this was a reasonable measure of defendant's additional
 economic benefit gained from noncompliance.  Cf. 9 V.S.A.  41a(a)
 (setting 12% per annum as the statutory legal rate of prejudgment
 interest). 

      The ELD must consider all of the statutory criteria in calculating a
 penalty.  10 V.S.A.  8012(b)(4) and 8010(b).  On cross-appeal, ANR
 contends that the ELD calculated the penalty based only on economic
 benefit, and wholly ignored the deterrence requirement.  The ELD decision
 discussed all factors in assessing a penalty.  Regarding deterrence, the
 ELD found that even in the absence of lasting environmental or public harm,
 the need to deter noncompliance demanded the imposition of a monetary
 penalty against defendant.  It did not impose an added amount specifically
 for deterrence.  We believe this analysis is within ELD's broad discretion
 in fashioning an appropriate sanction. 

      The decision of the Environmental Law Division that a violation of
 defendant's permit occurred is affirmed.  The civil penalty determination
 is reversed and remanded for proceedings 

 

 not inconsistent with this opinion. 



                                    FOR THE COURT:




                                    _______________________________________
                                    Associate  Justice