In re Wal*Mart Stores, Inc.

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In re Wal*Mart Stores, Inc. (95-398); 167 Vt. 75; 702 A.2d 397

[Filed 29-Aug-1997]

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. 95-398

In re Wal*Mart Stores, Inc. Supreme Court
and The St. Albans Group
On Appeal from
Environmental Board

March Term, 1996

Arthur Gibb, Chair

Peter M. Collins and Mark G. Hall of Paul, Frank & Collins, Inc.,
Burlington, for appellants Wal*Mart Stores, Inc. and The St. Albans Group

David A. Barra of Hill, Unsworth, Barra, Bowles & Gannon, Essex
Junction, for appellant Town of St. Albans

Joseph F. Cahill, Jr. and Timothy J. Ryan of Brown, Cahill, Gawne &
Miller, St. Albans, for amicus curiae Franklin County Industrial
Development Corp.

Thomas F. Heilmann of Heilmann, Ekman & Associates, Inc., Burlington,
for amicus curiae Vermont Association of Realtors , Inc.

William E. Roper of Neuse, Smith, Roper & Venman, P.C., Middlebury,
Christopher M. Kilian and Mark Naud, Law Clerk (On the Brief), Montpelier,
for amicus curiae Vermont Natural Resources Council

Francis X. Murray, South Burlington, for amicus curiae Franklin/Grand
Isle County Citizens for Downtown Preservation

Jeffrey L. Amestoy, Attorney General, and Ronald A. Shems and John H.
Hasen, Assistant Attorneys General, Montpelier, for amicus curiae State of
Vermont

PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

GIBSON, J. Wal*Mart Stores, Inc. and The St. Albans Group (Wal*Mart)
and the Town of St. Albans (Town) appeal an order of the Environmental
Board denying Wal*Mart's application, pursuant to 10 V.S.A. chapter 151
(Act 250), for a permit to build a retail store in the Town. Wal*Mart and
the Town claim that the Board erred in: (1) considering perceived adverse
impacts on municipal tax revenues arising from Wal*Mart's competition in
the regional

market, a factor they contend is irrelevant and too speculative to be
considered; (2) requiring Wal*Mart to produce a study of secondary-growth
impacts to satisfy several Act 250 criteria; (3) interpreting Criterion
9(A) (impact of growth) to apply to commercial growth, not simply
population growth; (4) finding that the proposed store would be "scattered
development" under Criterion 9(H); (5) requiring, under Criterion 5
(traffic), a lower level of congestion than is required by the Agency of
Transportation; and (6) concluding that the proposed store would unduly
burden local municipalities' ability to provide municipal and educational
services under various criteria. We affirm the Board's denial of a permit
under Criterion 9(A), and do not reach its ruling under Criterion 9(H).

In September 1993, Wal*Mart filed an application under Act 250 for a
permit to build a retail store in the Town. The District #6 Commission
found that the application satisfied all criteria listed in 10 V.S.A. §
6086(a), and granted a permit for the project. Franklin/Grand Isle County
Citizens For Downtown Preservation (Citizens), the Vermont Natural
Resources Council (VNRC) and Commons Associates appealed the district
commission's decision to the Board. Citizens appealed the decision with
respect to Criteria 5 (traffic), 6 (impact on education), 7 (municipal
services), 9(A) (impact of growth), and 9(H) (costs of scattered
development). VNRC appealed the decision with respect to Criteria 9(A) and
9(H).(FN1)

After de novo review of the appealed criteria under 10 V.S.A. §
6089(a), the Board denied Wal*Mart's permit application on December 23,
1994 under Criteria 9(A) and 9(H). The Board also concluded that Wal*Mart
had failed to satisfy Criteria 6 (impact on education) and 7 (impact on
municipal services), although a permit may not be denied on these criteria
alone. See 10 V.S.A. § 6087(b). In response, Wal*Mart moved to alter the
decision. The Board denied the motion and issued a final order, with minor
changes, on June 27, 1995.

The Board authorized reconsideration of Wal*Mart's application under
10 V.S.A. §

6087(c), but ordered that, if Wal*Mart chose to seek reconsideration, it
must provide a credible study of secondary-growth impacts and propose a
permit condition to alleviate the burden caused by the project for any
municipality in which the public costs outweigh the public benefits.(FN2)
The present appeal followed.

We give deference to the Environmental Board's interpretations of Act
250 and its own rules, and to the Board's specialized knowledge in the
environmental field. Secretary, Vermont Agency of Natural Resources v.
Earth Constr., Inc., ___ Vt. ___, ___, 676 A.2d 769, 772 (1996). Absent
compelling indications of error, we will sustain its interpretations on
appeal. In re Chittenden Recycling Servs., 162 Vt. 84, 90, 643 A.2d 1204,
1208 (1994). Our deferential level of review, however, "does not equate
with mere judicial passivity in determining the propriety of Board
`interpretations' of its own rules." In re Vitale, 151 Vt. 580, 583, 563 A.2d 613, 615 (1989). Rather, as with all legislative schemes, we are
guided by the intent of the Legislature, as evidenced by the statutes
themselves. Id.

The Legislature requires that "[t]he findings of the board with
respect to questions of fact, if supported by substantial evidence on the
record as a whole, shall be conclusive." 10 V.S.A § 6089(c); see In re
Killington, Ltd., 159 Vt. 206, 210, 616 A.2d 241, 244 (1992). Thus, we will
affirm the Board's findings if based on evidence properly before the Board
that is relevant and that a reasonable person might accept as adequate to
support a conclusion. In re Denio, 158 Vt. 230, 236, 608 A.2d 1166, 1170
(1992). We will affirm the Board's conclusions of law if "they are
rationally derived from a correct interpretation of the law and findings of
fact based on substantial evidence." In re BHL Corp., 161 Vt. 487, 490,
641 A.2d, 771, 773 (1994).

Wal*Mart and the Town argue that the Board's findings and conclusions
on the impacts

of market competition should be overturned because such impacts are
irrelevant to Act 250 review. Amici VNRC and Citizens contend that
Wal*Mart failed to object to the relevance of marketing and
secondary-growth studies before the Board, and therefore, is precluded from
raising this issue before us. See 10 V.S.A. § 6089(c) (objection that has
not been urged before Board may not be considered by Supreme Court).

Although the parties did not specifically address the admissibility or
use of either a marketing or a secondary-growth study, it is clear that
Wal*Mart objected to the relevance of economic impacts early in the
process. In a prehearing memorandum, VNRC indicated that, at the hearing
on the merits, it intended to address the extent to which fiscal tax
impacts resulting from the proposed project's competition with existing
retail stores would violate Criterion 9(H). In response, Wal*Mart argued
that Act 250 does not authorize the Board to consider anything more than
the additional costs to the community for public services and facilities
caused by the project. Wal*Mart specifically stated, "There is no
indication that Criterion 9(H) is intended to provide a scale for measuring
the overall economic impact of a retail store on private businesses located
in neighboring towns." Wal*Mart raised the issue again in its hearing
memorandum and in its proposed findings of fact.

The Board acknowledged that the parties had questioned the relevance
of the project's effect on existing retail stores and on the tax base of
the various localities. It ruled against Wal*Mart's objections and
concluded that the project's impacts on retail sales and tax revenues were
relevant to Criteria 6, 7, 9(A) and 9(H). The question is therefore
properly before the Court.

The Board's conclusion that the project's impact on market competition
is a relevant factor under Criterion 9(A) finds support in the plain
language of the statute, which requires the Board to consider the
"financial capacity" of the town and the region to accommodate growth. 10
V.S.A. § 6086(a)(9)(A); see Green Tree Credit Corp.v. Kenyon, 163 Vt. 631,
632, 660 A.2d 296, 298 (1995) (mem.) (if statute's meaning is plain on
face, Court will enforce statute

according to its terms). Further, Criterion 9(A) requires consideration of
the cost of "education, highway access and maintenance, sewage disposal,
water supply, police and fire services and other factors relating to the
public health, safety and welfare." A municipality's ability to pay for
these services depends on its tax base, that is, the appraised value of
property in the municipality's grand list. To the extent that a project's
impact on existing retail stores negatively affects appraised property
values, such impact is a factor that relates to the public health, safety,
and welfare. Cf. People v. Kohrig, 498 N.E.2d 1158, 1166 (Ill. 1986)
("`[I]n the interest of general welfare, the police power may be exercised
to protect citizens and their businesses in financial and economic matters,
[and] it may be exercised to protect the government itself against
potential financial loss.'") (quoting Sherman-Reynolds, Inc. v. Mahin, 265 N.E.2d 640, 642 (Ill. 1970)). There is no compelling indication of error
in the Board's interpretation of Criterion 9(A).

The same analysis applies to Criteria 6 and 7, which require findings
pertaining to "the ability of a municipality to provide educational
services" and "the ability of the local governments to provide municipal or
governmental services." Just as the public health, safety, and welfare
depend on the tax base, so do educational and other public services. The
arguments of Wal*Mart and amicus Vermont Association of Realtors , Inc. to
the contrary are unavailing.

Wal*Mart contends, however, that the Board should not have considered
the project's impact on market competition because projections of such
impacts are speculative and unreliable. In support of this contention,
Wal*Mart relies on several studies of the accuracy of economic impact
analysis that do not appear in the record. Moreover, Wal*Mart does not
indicate that this issue was ever raised before the Board. In any event,
such an argument goes not to admissibility, but rather to the weight and
sufficiency of the evidence. See, e.g., Croce v. Bromley Corp., 623 F.2d 1084, 1094 (5th Cir. 1980) (speculative nature of evidence of future
earnings affects only weight, not admissibility). There was no error in
the Board's consideration of the proposed store's impact on market
competition.

II.

Wal*Mart and the Town next argue that the Board erred in requiring
Wal*Mart to provide secondary-growth studies to satisfy Criteria 6, 7, and
9(A). The Board concluded that, when a project is likely to cause
secondary growth, Criteria 6, 7, and 9(A) require the applicant to provide
a secondary-growth study. Because Wal*Mart did not provide the study, the
Board concluded that Wal*Mart had not met its burden under Criteria 6, 7,
and 9(A). To correct deficiencies in the application, the Board requires
Wal*Mart to provide a study that quantifies secondary-growth impacts the
proposed store will have in its vicinity, and to address the ability of the
Town and region to accommodate the secondary growth.

Criterion 9(A) requires the Board to consider whether a proposed
development would affect the financial capacity of the town and region to
accommodate growth. 10 V.S.A. § 6086(a)(9)(A). It requires the Board to
consider the total growth and the rate of growth anticipated for the town
and region, both without the project and with the project as proposed. Id.
After considering the expected cost of services resulting from such growth,
the Board must impose conditions to "prevent undue burden upon the town and
region in accommodating growth caused by the proposed development." Id.
Thus, the plain language of the statute requires the Board to consider the
growth caused by the project (secondary growth), the anticipated costs to
the town and region, and the financial capacity of the town and region to
accommodate the growth.

In this case, the Board concluded that the proposed store would
accelerate and attract substantial secondary growth. This conclusion was
based at least in part on evidence presented by Wal*Mart concerning eleven
case studies of the competitive impact of other Wal*Mart stores. To make a
positive finding under Criterion 9(A), the Board concluded that it would
need evidence of the expected secondary growth and its associated costs and
benefits to determine whether the project would cause an undue burden on
the financial capacity of the town and the region. Under the Board's
rules, it "may require such additional information or supplementary

information as the board or commission deems necessary to fairly and
properly review the proposal." Environmental Board Rule 10(B), 6 Code of
Vermont Rules 12003001, at 10 (1996). We find no error in the Board's
conclusions.

We reach the same result under Criteria 6 and 7 concerning a
municipality's ability to provide educational, municipal, and governmental
services. The inquiry focuses on the reasonableness of the burdens imposed
on the local government. When a project will result in commercial
development and, consequently, in added strain on the financial abilities
of affected local governments, the Board must have sufficient evidence to
determine whether an unreasonable burden would be placed on those
governments. A secondary-growth study would greatly facilitate this
inquiry. We find no error in the Board requiring such a study in this
instance.

Wal*Mart, the Town, and amici Vermont Association of Realtors , Inc.
and Franklin County Industrial Development Corporation argue that by
including the impact of secondary growth in its review of Wal*Mart's permit
application, the Board is, in effect, reviewing small projects that do not
individually fall within Act 250 jurisdiction. According to the project
proponents, such review usurps local control and makes Vermont unfriendly
to business. We note that because the Town has adopted zoning and
subdivision regulations, a project in the Town does not trigger Act 250
jurisdiction unless it involves ten or more acres of land. 10 V.S.A. §
6001(3). It is not apparent to us how the requirement of a
secondary-growth study amounts to a de facto exercise of jurisdiction over
projects that involve less than ten acres of land. The purpose of such a
study herein is to assess secondary-growth impacts caused by Wal*Mart and
is not a dispositive review of subsequent small-scale developments that
will be subject to local control. See In re Rusin, 162 Vt. 185, 190, 643 A.2d 1209, 1211 (1994).

Wal*Mart contends that it is unfair to use a secondary-growth study to
devise permit conditions, essentially requiring Wal*Mart to mitigate other
development. We decline, however, to review the validity of a permit
condition that does not exist. Cf. In re Taft Corners Assocs.,

160 Vt. 583, 588, 632 A.2d 649, 652 (1993) ("[W]e decline to review a
[Board] decision that is not a final disposition of the matter."). The
proponents further contend that the studies required by the Board are too
speculative to be an Act 250 permit requirement. Again, the speculative
nature of secondary studies affects the weight of the evidence not its
admissibility. See Croce, 623 F.2d at 1094 (5th Cir. 1980).

III.

Wal*Mart and the Town appeal the Board's conclusion that the term
"growth" in Criterion 9(A) (impact of growth) includes economic as well as
population growth. Specifically, they urge application of ejusdem generis,
a rule of statutory construction in which general terms that follow
specific terms are limited or restricted to those earlier specified, and
will not include any classes greater than those to which the particular
words belong. Cf. Vermont Baptist Convention v. Burlington Zoning Bd., 159
Vt. 28, 30, 613 A.2d 710, 711 (1992) (when construing enactment with series
of defining terms, Court will apply rule of ejusdem generis, and latter
general terms will be construed to include only things similar in character
to those specifically defined). They argue that the word "growth,"
wherever it appears in Criterion 9(A), does not include "commercial
growth," because the term "growth in population" in the first sentence
restricts the meaning of the word "growth" throughout the section. In
addition, Wal*Mart refers to documents published by the Board to
demonstrate that the term is limited to population growth.

When interpreting statutes, our primary task is to discern the
Legislature's intent and to give effect to that intent. State v. Ben-Mont
Corp., 163 Vt. 53, 57, 652 A.2d 1004, 1007 (1994). In determining
legislative intent, we "look beyond the language of a particular section,
standing alone, to `the whole statute, the subject matter, its effects and
consequences, and the reason and spirit of the law.'" Spears v. Town of
Enosburg, 153 Vt. 259, 262, 571 A.2d 604, 605-06 (1989) (quoting In re R.S.
Audley, Inc., 151 Vt. 513, 517, 562 A.2d 1046, 1049 (1989)). Thus,
"[a]lthough rules of statutory construction may be helpful in interpreting
the

meaning of statutes, they are secondary to our primary objective of giving
effect to the intent of the legislature." Board of Trustees of
Kellogg-Hubbard Library, Inc. v. Labor Relations Bd., 162 Vt. 571, 575, 649 A.2d 784, 786 (1994).

In this case, the limited construction urged by appellants conflicts
with the express legislative intent of the statute. When it enacted Act
250, the Legislature included a statement of intent, declaring it necessary
to regulate the use of land to insure that permits are granted only where
the uses "are not unduly detrimental to the environment, will promote the
general welfare through orderly growth and development and are suitable to
the demands and needs of the people of this state." 1969, No. 250 (Adj.
Sess.), § 1 (emphasis added).

Three years later, the Legislature amended Act 250 and clarified the
purpose of the Act. See 1973, No. 85. Criterion 9(A) (impact of growth)
was part of the 1973 amendment, which was accompanied by a statement of
legislative intent and findings to guide implementation of the statute.
See 10 V.S.A. § 6042 (history to section). Therein, the Legislature called
for statewide planning based on "a projection of the reasonably expected
population increase and economic growth." 1973, No. 85, § 7(a)(4)(C)
(emphasis added). Similarly, the Legislature called for provision of
governmental and public utility services "based upon a projection of
reasonably expected population increase and economic growth." Id. §
7(a)(15) (emphasis added). Both Findings are entitled "Planning for
Growth."

We conclude that the Legislature intended the word "growth," as used
in Criterion 9(A), to apply to economic, as well as population, growth.
See Southview Assocs. v. Bongartz, 980 F.2d 84, 89 (2d Cir. 1992)
(Legislature in Act 250 recognized importance of economic growth).
Accordingly, we see no compelling indication of error in the Board's
interpretation of Criterion 9(A).

IV.

In addition to denying the permit under Criteria 9(A) and 9(H), the
Board discussed other criteria that Wal*Mart must address in any subsequent
proceedings. Under Criterion 5 (traffic),

the Board concluded that the proposed project is in a rural, not urban,
area, and that Wal*Mart must provide a plan appropriate for the lower level
of traffic congesti on experienced in rural areas.

AOT has established graduated standards for traffic flows, or "Levels
of Service" (LOS), on a scale from "A" to "F," with A addressing the
lightest flows and F the heaviest. As a general matter, AOT has determined
that LOS D (twenty-five-to forty-second delay per average vehicle) is
acceptable in urban areas, but that LOS C (fifteen-to twenty-five-second
delay per average vehicle), a higher standard, is required in rural areas.
AOT experts testified that the intersection at issue is in an urban area
and therefore requires only traffic LOS D. Wal*Mart and the Town argue
that the Board must accept AOT's determination on this issue. They argue
that the Board exceeded its legislative authority and improperly intruded
on the authority granted to AOT by ruling LOS D acceptable only in compact
urban centers rather than generally in urban areas. We disagree.

Criterion 5 states that no development shall "cause unreasonable
congestion or unsafe conditions with respect to the use of the highways,
waterways, railways, airports and airways, and other means of
transportation." 10 V.S.A. § 6086(a)(5). The Board ruled that in areas
outside "compact urban centers," congestion levels below LOS C are
unreasonable. The Board also found that the area at issue in this case was
rural and that the project would result in LOS D level of traffic at the
intersection of Newton Street and Route 7. It concluded that such a
congestion level would be unreasonable, and that if Wal*Mart pursued
reconsideration, it would be required to provide the Board with a plan
adequate to meet LOS C at all affected intersections.

Under Criterion 5, the Board must make its own determination as to the
nature of the area and the level of service appropriate for that area. See
In re Agency of Transp., 157 Vt. 203, 206, 596 A.2d 358, 359 (1991).
Moreover, the Board's traffic requirements are limited to the context of
Act 250. The Board's conclusion does not mean that, at intersections
outside

compact urban areas, LOS C is the standard to be used by AOT. The Board
has simply determined that, for the purposes of Criterion 5, a traffic flow
below LOS C at intersections outside compact urban areas is "unreasonable."
See id. at 208, 596 A.2d at 360 (that less stringent requirements exist
elsewhere does not preclude stricter Act 250 requirements). We see no
compelling error in the Board's conclusion.

Wal*Mart asserts, for the first time in its reply brief, that the
Board's traffic standard must be adopted pursuant to formal rulemaking
under the Administrative Procedures Act. We need not reach this issue,
however, because "issues not briefed in the appellant's or the appellee's
original briefs may not be raised for the first time in a reply brief."
Bigelow v. Department of Taxes, 163 Vt. 33, 37, 652 A.2d 985, 988 (1994).
Wal*Mart also argues that the Board's determination violates a Memorandum
of Understanding between the Board and AOT. Although Wal*Mart quotes
portions of the Memorandum in its brief, the Memorandum does not appear as
part of the appellate record and is thus beyond our review. See Morse v.
Morse, 126 Vt. 290, 292, 229 A.2d 228, 230 (1967) (facts outside record of
case cannot be considered on appeal).

Wal*Mart and the Town argue that the Board erred in concluding that
the proposed development will cause an undue burden under Criterion 6
(impact on education) by adding six children to the school system. They
maintain that six students represent 0.2% of the student population, and
such a de minimis impact cannot be an undue burden as a matter of law.
Moreover, they contend that the Board's findings predict a net job loss to
the region, which would result in a decline in school population,
offsetting the six additional students.

We do not read the Board's decision as concluding that six additional
children would be an undue burden on the school system. Rather, the Board
concluded that Wal*Mart failed to meet its burden of production with
respect to Criterion 6. Although the Board found that the project would
result in six additional children, it also stated that it is possible that
job loss would

result in an offsetting decline in student population if parents moved away
in search of jobs. The Board found, however, that the record did not
contain sufficient evidence to support such a finding. Similarly, the
Board concluded that absent evidence of secondary-growth impact, the Board
was unable to conclude that the project "[w]ill not cause an unreasonable
burden on the ability of a municipality to provide educational services."
10 V.S.A. § 6086(a)(6).

Although Wal*Mart did not bear the burden of proof with respect to
Criterion 6, once Wal*Mart had offered evidence showing that the project
would cause a burden on regional education services, the Board could
properly require Wal*Mart to produce additional evidence demonstrating its
plan to reduce or eliminate that burden. See Denio, 158 Vt. at 237, 608 A.2d at 1170 (nothing in language of Act 250 prevents Board from finding
against applicant on issue even though applicant does not have burden of
proof on that issue). We see no error in the Board's conclusion.

Affirmed.

FOR THE COURT:

_____________________________________________
Associate Justice

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Footnotes

FN1. Citizens and VNRC also appealed under several other criteria,
but neither party has pursued those claims to this Court. Commons
Associates subsequently dropped its appeal.

FN2. Because we affirm the denial of the permit based on Wal*Mart's
failure to meet its burden under Criterion 9(A), we do not reach the issues
raised under Criterion 9(H).

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