In re Nehemiah Associates, Inc.

In re Nehemiah Associates, Inc.  (97-223); 168 Vt. 288; 719 A.2d 34

[Filed 11-Sep-1998]

       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. 97-223


In re Nehemiah Associates, Inc.              Supreme Court

                                             On Appeal from
                                             Environmental Board

                                             February Term, 1998



John T. Ewing, Chair

       James P. W. Goss of Reiber, Kenlan, Schwiebert, Hall & Facey, P.C.,
  Rutland, for Appellant.

       William H. Sorrell, Attorney General, and John H. Hasen and Rebecca M.
  Ellis, Assistant Attorneys General, Montpelier, for Amicus Curiae State.

       Robert E. Woolmington and Elizabeth A. Boepple of Witten, Woolmington,
  Bongartz & Campbell, P.C., Bennington for Amicus Curiae Perkins.


PRESENT:  Dooley, Morse, Johnson and Skoglund, JJ.

       SKOGLUND, J.  Nehemiah Associates, Inc. appeals from a decision of the
  Environmental Board denying Nehemiah's application for an Act 250 permit
  amendment to subdivide and develop a 3.38-acre lot into three residential
  building lots.  Nehemiah previously appealed the Board's decision denying
  its application, and we reversed and remanded for the Board to balance the
  policy considerations raised by the parties.  See In re Nehemiah Assocs.,
  Inc., 166 Vt. 593, 595, 689 A.2d 424, 426 (1996) (mem.) ("Nehemiah I"). 
  Nehemiah contends that on remand the Board:  (1) erred because our holding
  in Nehemiah I mandated approval of the permit amendment; (2) applied an
  improper test and relied upon inappropriate factors to determine whether to
  grant Nehemiah's application; and (3) abused its discretion by basing its
  denial of Nehemiah's application on findings and conclusions it altered or
  added to its pre-remand decision without holding another evidentiary
  hearing.  In addition, Nehemiah claims

 

  that, even if the Board used the correct balancing test and considered the
  proper factors, Nehemiah satisfied the standard.  We affirm.

       For purposes of this appeal, we must again set forth a brief history. 
  In 1989, Nehemiah purchased twelve acres of land on Route 3 in Pittsford
  for the purpose of developing the land into a residential subdivision.  At
  the time of the purchase, the property was surrounded primarily by
  agricultural and limited-usage lands.  Nehemiah applied for and received an
  Act 250 permit authorizing it to subdivide the land into eleven lots:  ten
  residential lots, each less than one acre, and a single 3.38-acre lot along
  Route 3 that would be left undeveloped to satisfy the requirements of 10
  V.S.A. § 6086(a)(9)(B) (criterion 9B).  Criterion 9B is designed to
  preserve the agricultural potential of prime agricultural soils.  To
  satisfy this criterion, Nehemiah drafted, at the commission's request, a
  proposed right-to-farm covenant to permit continued agricultural and
  related farming activities on the 3.38-acre lot.

       The district commission found that such use of this parcel would also
  provide a visual buffer, thereby satisfying the aesthetic considerations of
  § 6086(a)(8) (criterion 8).  Relying on the right-to-farm covenant, the
  commission further found that the proposed development complied with
  criterion 9B.  The commission then incorporated Nehemiah's proposed
  right-to-farm covenant into condition 9 of the Act 250 permit, which it
  granted to Nehemiah on December 27, 1989.  Condition 9 of the permit
  required Nehemiah to insert the covenant regarding the reserve land in all
  subdivision deeds in order to put buyers on notice of the planned
  agricultural use of the 3.38 acres and to inform them that they waived
  their right to sue a farmer for agricultural nuisance.  In addition to the
  agreed-upon covenant language, the commission sua sponte included the
  following language at the end of condition 9:  "Furthermore, the permittee
  or subsequent landowners association shall maintain the 3.38-acre
  agricultural reserve lands as open, cleared, uncluttered, and unencumbered
  land."

       Nehemiah divided and sold nine lots in the subdivision, leaving the
  reserve land undeveloped.  The nine deeds each included the right-to-farm
  covenant of condition 9, but

 

  intentionally omitted the open-land paragraph set forth above.  When
  selling the lots, Nehemiah informed all buyers that the reserve land would
  remain undeveloped because of criterion 9's primary agricultural soils
  restriction.  Nehemiah, however, regarded future development of the reserve
  land as a reserved right apparent to any person, including the purchasers,
  who examined the 1989 permit application.

       After the commission granted Nehemiah's permit, the Vermont Department
  of Agriculture instituted an off-site agricultural soils mitigation program
  (agsoils program).(FN1)  In 1992, citing the availability of the agsoils
  program, Nehemiah filed an application to amend its land-use permit,
  requesting permission to subdivide the reserve land into three residential
  lots. At the hearing, the commission found that participation in the
  agsoils program would put the development of the reserve land into
  compliance with criterion 9B.  Nevertheless, the commission denied the
  permit amendment because it found that the development of the reserve land
  would not conform with the aesthetic considerations of criterion 8. 
  Nehemiah appealed to the Environmental Board.

       After the Environmental Board held a hearing on the matter, it issued
  a decision in which it concluded that all the elements of collateral
  estoppel were met with respect to condition 9. Nonetheless, to avoid
  applying the doctrine rigidly in an administrative proceeding, the Board
  engaged in its regular policy analysis, weighing considerations of
  flexibility against finality.  It concluded that, because of Nehemiah's
  failure to include the open-land paragraph in the deeds, the policy of
  finality outweighed the policy of flexibility.  The Board therefore denied
  Nehemiah's requested amendment without reaching condition 8.  Nehemiah
  appealed the Board's decision to this Court.

       In Nehemiah I, we concluded that Nehemiah had reasonably construed
  condition 9 with

 

  respect to the open-land paragraph, holding therefore that the Board had
  erred in concluding it was a required deed covenant.  See 166 Vt. at 594,
  689 A.2d  at 425.  We further concluded that, while an analysis of finality
  and flexibility could provide sufficient grounds to deny a permit
  amendment, the Board erred in relying on collateral estoppel because the
  doctrine's elements do not constitute appropriate standards with which to
  evaluate a permit amendment application.  Nehemiah I, 166 Vt. at 594, 689 A.2d  at 425 (reiterating recent holding from In re Stowe Club Highlands,
  166 Vt. 33, 687 A.2d 102 (1996)).  We therefore reversed and remanded the
  Board's decision "for the Board to balance the policy considerations raised
  by the parties to determine whether to grant the permit amendment." 
  Nehemiah I, 166 Vt. at 595, 689 A.2d  at 426.

       On remand, the Board again balanced the competing policies of
  flexibility and finality in relation to condition 9.  The second time,
  however, it considered the open-land paragraph as a substantive condition
  of the permit rather than as a required deed covenant.  It again concluded
  that the policy of finality outweighed the policy of flexibility and denied
  Nehemiah's application for a permit amendment.  This appeal followed.

       We accord deference to the Environmental Board's interpretations of
  Act 250, its own rules, and to the Board's specialized knowledge in the
  environmental field.  See In re Wal*Mart Store, Inc., ___ Vt. ___, ___, 702 A.2d 397, 400 (1997).  Absent compelling indications of error, we will
  sustain the Board's interpretation on appeal.  See id.  Further, the
  Board's decisions are presumed to be correct, valid, and reasonable.  See
  In re Denio, 158 Vt. 230, 239, 608 A.2d 1166, 1171 (1992).

                                     I.

       Nehemiah contends that on remand the Board erred in not automatically
  granting its application based on our holding in Nehemiah I and the Board's
  pre-remand findings.  Nehemiah argues as follows.  First, the Board
  concluded in its pre-remand decision that, until such time as Nehemiah
  fully complied with condition 9 of the 1989 permit by inserting the
  open-land

 

  paragraph into the individual deeds, the policy of finality outweighed the
  policy of flexibility. Second, this Court concluded that the open-land
  paragraph was not a covenant and, therefore, that Nehemiah was not required
  to insert it into the individual deeds.  Third, we reversed the Board's
  pre-remand decision because it was based solely on the erroneous conclusion
  that condition 9 required inclusion of the open-land paragraph in the
  deeds.  Finally, Nehemiah alleges that, since condition 9, "the sole
  impediment to issuing the Amendment," was no longer at issue, the Board
  should have issued the permit on remand because at that point the policy of
  flexibility outweighed the policy of finality.

       This argument, however, overlooks one very important detail.  Although
  we held in Nehemiah I that the open-land paragraph was not a covenant, we
  recognized that the open-land paragraph was still a permit condition.  See
  166 Vt. at 594, 689 A.2d  at 425 (stating open-lands paragraph is condition
  of original permit to which Nehemiah seeks amendment).  The Board in its
  pre-remand decision analyzed the open-land paragraph as a required, but
  missing, covenant, but failed to balance the policies of flexibility and
  finality with respect to the open-land paragraph as a condition of the 1989
  permit.  In fact, the Board expressly noted that, because it based its
  decision on the doctrine of collateral estoppel, it did not reach the issue
  of whether the project complied with criterion 8.

       On remand, we required the Board to balance policy considerations that
  were raised by the parties in determining whether to amend the condition 9,
  which included the open-land paragraph.  This is exactly what the Board
  did; consequently, there is no error.(FN2)

                                     II.

       Nehemiah next alleges several errors in regard to the test used by the
  Board and the factors it considered in determining whether to grant
  Nehemiah's application.  First, Nehemiah

 

  contends that the Board erred by not applying the ten criteria of Act 250
  in determining whether to grant a permit amendment.  See 10 V.S.A. §
  6086(a).  Second, Nehemiah contends that, even if the ten criteria of §
  6086(a) are not applicable to an application to amend a permit, the policy
  considerations of flexibility and finality were improperly weighed by the
  Board because the use of the doctrine of collateral estoppel was rejected
  in Nehemiah I.  Finally, Nehemiah alleges that, even if the policy concerns
  of finality and flexibility were properly considered by the Board on
  remand, the Board improperly considered the commission and property owners'
  reliance interests because the weighing of reliance interests is beyond the
  scope of powers granted to the Board and the Board is not equipped to
  handle such a concern.  We disagree.

       If a development or subdivision falls within Act 250, a permit will be
  granted only if it conforms to the ten criteria of § 6086(a).  Neither Act
  250 nor the Board's rules, however, provide a standard for dealing with
  amendments to previously granted permits.  Under Board rules, amendments
  are warranted in certain circumstances.  See Environmental Board Rule 34
  ("An amendment shall be required for any material or substantial change in
  a permitted project.").  The primary question in amendment cases "is not
  whether to give effect to the original permit conditions, but under what
  circumstances those permit conditions may be modified."  Stowe Club
  Highlands, 166 Vt. at 37, 687 A.2d  at 105.

       Conditions set forth in a permit allow the permittee to proceed with
  the subdivision or development while maintaining compliance with Act 250. 
  After the permit is granted and circumstances change, existing permit
  conditions may no longer be a cost-effective or efficient method to
  minimize the development or subdivision's impact.  The permitting process
  should therefore be flexible enough to address changes in circumstance.  To
  assist in assessing the competing policies of flexibility and finality in
  the permitting process, the Board has identified three kinds of changes
  that would justify an amendment to a permit condition: (a) changes in
  factual or regulatory circumstances beyond the control of a permittee; (b)
  changes in the construction or operation of the permittee's project, not
  reasonably foreseeable at the time

 

  the permit was issued; or (c) changes in technology.  Stowe Club Highlands,
  166 Vt. at 38, 687 A.2d  at 105.  On remand in this case, the Board again
  considered these kinds of changes in evaluating Nehemiah's requested permit
  amendment.

       Even where the Board finds such a change, there are certain situations
  where an amendment may not be justified, for instance where the change was
  reasonably foreseeable at the time of permit application.  "Otherwise, the
  initial permitting process would be merely a prologue to continued
  applications for permit amendments."  Stowe Club Highlands, 166 Vt. at 39,
  687 A.2d  at 106.  The permitting process requires some finality because,
  both at the time the permit issues and subsequently, the parties and other
  interested persons reasonably rely on the permit conditions in making
  decisions.  District commissions as well may reasonably expect to rely on
  permit conditions as a factor in evaluating further development in the area
  of the permitted project.  Thus, the Board has appropriately established a
  balancing test of flexibility and finality in the permitting process.

       As we suggested in Stowe Club Highlands, it is desirable that the
  Board further develop a set of standards, either through rulemaking or
  through individual decisions, to create a consistent approach to permit
  amendment requests.  See 166 Vt. at 37, 687 A.2d  at 105.  It is for the
  Board, in the first instance, to decide what standards will guide its
  evaluation of permit amendment requests and what role the ten criteria of
  Act 250 shall have in such evaluations. The Board has used flexibility and
  finality as policy considerations separate and apart from the doctrine of
  collateral estoppel.  We hold that, in this case, as in Stowe Club
  Highlands, the Board appropriately weighed the interests of finality and
  flexibility in the permitting process.

       In its decision on remand, the Board appraised the parties' and
  district commission's interests in finality and concluded that three
  landowners "all reasonably relied on the substantive requirement of
  condition # 9 of the 1989 permit that `the permittee or subsequent
  landowners association shall maintain the 3.38-acre agricultural reserve
  lands as open, cleared, uncluttered, and unencumbered land' as a condition
  required under Criterion 8."  The Board also concluded

 

  that the district commission relied on condition 9 when it issued the 1989
  permit.  These conclusions are supported by the Board's findings.

       Nehemiah argues that the Board lacks authority and competency to weigh
  competing reliance interests of parties because nowhere in 10 V.S.A.
  Chapter 151 is there any authorization for the Board to weigh the
  contractual reliance interests of parties to a real estate purchase and
  sale agreement in connection with an amendment proceeding.  The Board did
  not do this. Nehemiah's attempt to cast the Board's decision as the
  equivalent of a decision on a civil action for rescission cannot obscure
  the basic concern that was before the Board:  whether allowing the permit
  amendment is appropriate under the circumstances.  See Stowe Club
  Highlands, 166 Vt. at 40, 687 A.2d  at 106 ("This hypertechnical argument
  obscures the basic concern: whether allowing the permit amendment is
  appropriate under the circumstances.")

                                    III.

       Nehemiah alleges that the Board erred by altering or adding to its
  pre-remand findings and conclusions on remand without giving the parties an
  opportunity to present evidence or testimony.  We disagree.  The additional
  findings and new conclusions on remand were supported by the evidence and
  testimony presented by the parties during the pre-remand hearing. Nehemiah
  had a fair opportunity to develop its case and rebut the other parties'
  case.  All the Board did was supplement its findings and conclusions with
  evidence that was fairly before it. We find no error.

       Nehemiah further contends that the Board abused its discretion by
  unjustly reversing its pre-remand conclusions on remand.  As noted above,
  on remand the Board accepted the Court's direction to re-evaluate
  Nehemiah's request for a permit amendment through an analysis of the policy
  considerations of flexibility and finality.  This required that the Board
  alter its pre-remand findings and conclusions since it had not previously
  addressed the two policy considerations in relation to the open-land
  paragraph as a substantive condition of the permit.

       With respect to flexibility, the Board evaluated whether the types of
  change identified in

 

  Stowe Club Highlands as warranting a permit amendment were present in this
  case, i.e., whether there were changes in factual or regulatory
  circumstances, in the construction or operation of the project, or in
  technology.  See id. at 37; 687 A.2d  at 105.  In its pre-remand decision,
  the Board had concluded that the factual circumstances under criterion 8
  had changed because residential construction and subdivision activity had
  occurred in the area surrounding the 1989 project since the district
  commission had issued the permit.(FN3)  On remand, the Board again concluded
  factual circumstances beyond Nehemiah's control had changed, namely the
  development of land surrounding Nehemiah's project.  The Board further
  noted, however, that this change had occurred on land Nehemiah did not own
  and that such development is hardly unusual.  In neither the pre-remand nor
  remand decision did the Board find a change in the regulatory circumstances
  sufficient to have an impact on its analysis under criterion 8.  While the
  Board found that the agsoils program comprised a change in the regulatory
  circumstances which was beyond Nehemiah's control in 1989, it also found,
  and we agree, that Nehemiah's "participation in the agricultural soils
  mitigation program has no bearing on the requirement that the 3.38 acres be
  kept as open, cleared, uncluttered, and unencumbered land as a condition
  under Criterion 8."

       In its pre-remand decision, the Board did not make any findings or
  reach any conclusions concerning changes in construction or operation of
  Nehemiah's project.  By contrast, on remand the Board concluded that, when
  Nehemiah applied for the 1989 permit, it contemplated the possible
  development of the 3.38-acre parcel at some future time.  The Board based
  this conclusion on the finding in the remand decision that Nehemiah
  asserted a reserved right with regard to possible future development of the
  reserve land, and that this reserved right would be

 

  disclosed to any person who examined the 1989 permit.  While such a finding
  was not included in the pre-remand decision, the finding was based on
  Nehemiah's numerous admissions during the amendment process and the
  original permit application.  Moreover, this finding does not contradict
  the pre-remand finding that "the Agricultural Soils Mitigation Program did
  not exist at the time Appellant applied for and obtained the 1989 permit."

       In its pre-remand decision, the Board likewise made no findings or
  conclusions regarding changes in technology.  On remand, however, the Board
  found and concluded that no relevant evidence existed in the record of a
  change in technology with regard to the 1989 permit.

       In the pre-remand decision, the Board had concluded that the parties
  involved in the original permitting process and the commission relied on
  the permit's conditions.  The Board drew no conclusions, however,
  concerning the reliance interests of the purchasers of the various
  subdivision lots.  On remand, the Board again concluded that the commission
  relied on the original permit conditions in rendering its decisions.  In
  addition, the Board concluded that the purchasers of the subdivision lots
  reasonably relied on the open-land paragraph in making decisions to
  purchase their lots.  This conclusion was based on findings that were not
  included in the pre-remand decision.  Nonetheless, the remand conclusion
  and the findings that support it were derived from evidence and testimony
  presented at the original hearing before the Board, in which Nehemiah had a
  fair and ample opportunity to present its own case and rebut any opposing
  evidence and testimony.

       We conclude that there was no abuse of discretion by the Board on
  remand when it refined its pre-remand findings and conclusions and added
  new findings and conclusions.  The altered or additional findings and
  conclusions were all based on evidence and testimony in the pre-remand
  record, which Nehemiah had ample opportunity to litigate fully.

                                     IV.

       Finally, Nehemiah contends that, even if the Board applied the proper
  test, weighed the correct factors, and did not abuse its discretion in
  altering or adding to its pre-remand findings, the Board erred in denying
  its application for a permit amendment because there was sufficient
  evidence presented for the Board to grant Nehemiah's application. 
  "Determining the degree of adverse aesthetic effect is a matter of weighing
  of the evidence, a role for the Board rather than for this Court."  Denio,
  158 Vt. at 239, 608 A.2d  at 1171 .  Since the Board's findings and
  conclusions are supported by the evidence, we will not disturb the Board's
  determination on remand.  See 10 V.S.A. § 6089(c) ("The findings of the
  board with respect to questions of fact, if supported by substantial
  evidence on the record as a whole, shall be conclusive.").

       Affirmed.
                              FOR THE COURT:



                              _______________________________________
                              Associate Justice


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                                  Footnote



FN1.   Under this program, an Act 250 applicant can pay a fee to the
  Department of Agriculture to mitigate the loss of agricultural lands
  resulting from a subdivision or other development project.  These fees are
  then used to preserve agricultural lands in other parts of Vermont.

FN2.  Further, we note that, if Nehemiah's contention were true, we
  would not have had a reason to remand the case back to the Board.  Instead,
  if our ruling constituted an automatic grant of Nehemiah's application, we
  would have reversed the Board's decision and, on our own accord, have
  granted Nehemiah's application to amend its 1989 permit.

FN3.  This conclusion was based on the findings that since 1989:  (1)
  "[t]he area surrounding the 3.38 acres is characterized by residential
  development of comparable density and type to that proposed in the
  Project;" and (2) "[t]he Pittsford Town Plan identifies the area within
  which the Project is located as a location for residential growth in
  Pittsford [and] . . . that approved uses in this area include high density
  residential uses."