In re Denio

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                                 No. 89-214

 In re Chester P. and Bertha G. Denio         Supreme Court

                                              On Appeal from
                                              Environmental Board

                                              September Term, 1991

 Leonard U. Wilson, Chairman

 John D. Hansen, Rutland, for appellants

 Jeffrey L. Amestoy, Attorney General, Ron Shems, Assistant Attorney General,
   and David K. Mears, Law Clerk (On the Brief), Montpelier, for amicus
   curiae State

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

      DOOLEY, J.   Appellants Chester and Bertha Denio appeal a decision of
 the Vermont Environmental Board granting an Act 250 permit for a three-lot
 subdivision adjacent to an already existing 71-lot subdivision, but
 imposing twenty conditions.  The Denios contest the Board's exercise of
 jurisdiction and claim that the Board (1) misallocated the burden of proof
 on the issue of aesthetics; (2) made findings of fact and conclusions of law
 which were not based exclusively on the evidence before it and were erron-
 eous; and (3) set unreasonable conditions for the new lots.  We affirm.
      In 1972, appellants purchased approximately 263 acres in Shaftsbury and
 received an Act 250 permit for a 71-lot subdivision on 200 acres.  In 1987
 they applied to the District Environmental Commission for a permit to sub-
 divide an additional seven acres of their land into three lots.  The
 Commission considered their application as an amendment to the 1972 sub-
 division permit, and denied it, although it detailed conditions it would
 impose if it were to issue a permit.  Appellants then went to the Board for
 a de novo review of the Commission's decision, pursuant to 10 V.S.A. {
 6089.  After a hearing and visit to the site, the Board issued its findings
 of fact, conclusions of law, and an order permitting the proposed sub-
 division, subject to twenty conditions, on March 27, 1989.  Some of the
 conditions imposed by the Board required that the subdivision conform to
 certain plans stated in the permit application, and to statements made in
 the Board's findings and conclusions.  In part, the conditions were based on
 the Board's finding, under 10 V.S.A. { 6086(a)(8), that, in the absence of
 adherence to the conditions, the subdivision would adversely affect the
 aesthetics of the surrounding area.
      At no point in the proceedings before the Commission and Board did any
 party receiving notice of the requested permit and proceedings, under 10
 V.S.A. { 6085, raise objection or present evidence in opposition to the
 permit's issuance.  And at no point in the proceedings did appellants raise
 an objection to the exercise of Act 250 jurisdiction over the matter by the
 Commission and Board.
      Appellants' first claim is that the Board lacked jurisdiction over the
 subdivision proposal.  Although this issue was not raised before either the
 Commission or the Board, appellants argue that subject-matter jurisdiction
 can be raised at any time, including for the first time in this Court.  See
 Boisvert v. Boisvert, 143 Vt. 445, 447, 466 A.2d 1184, 1185 (1983).  We
 disagree that preservation is not required.
      Our general requirement that issues be raised in the forum from which
 an appeal is taken, before they are raised here, is statutorily required in
         Act 250 proceedings.  10 V.S.A. { 6089(c) provides:
         (c) No objection that has not been urged before the
         board may be considered by the supreme court, unless the
         failure or neglect to urge such objection shall be
         excused because of extraordinary circumstances.

 We have applied the statute to jurisdictional issues, although, in the case
 involved, In re State Aid Highway No. 1, 133 Vt. 4, 8, 328 A.2d 667, 669
 (1974), we found "extraordinary circumstances" to allow review without
 preservation.  More recently, we stated that "issues not raised below, even
 those having a constitutional dimension, need not be considered when
 presented for the first time on appeal."  In re Burlington Housing Auth.,
 143 Vt. 80, 81-82, 463 A.2d 215, 217 (1983).  We conclude that { 6089(c)
 applies and prevents appellants from raising the jurisdictional issue for
 the first time on appeal.  There are no "extraordinary circumstances" that
 would excuse the lack of preservation.
      We are guided in our interpretation of the preservation statute by the
 law of exhaustion of administrative remedies.  Requiring preservation of
 jurisdictional issues in an administrative forum, usually under the rubric
 of exhaustion of administrative remedies, is common in American law and must
 be viewed as an exception to the general rule that subject-matter juris-
 diction can be raised at any time. Based on his analysis of United States
 Supreme Court opinions, Professor Davis has indicated that three factors are
 considered in determining whether exhaustion of administrative remedies is
 required with respect to a jurisdictional issue.  See 3 K. Davis,
 Administrative Law { 20.03, 69 (1958 ed.).  Those are (1) the extent of
 injury from pursuit of an administrative remedy; (2) degree of apparent
 clarity or doubt about administrative jurisdiction; and (3) involvement of
 specialized administrative understanding in the question of jurisdiction.
 Id.; see also SEC v. G.C. George Securities, Inc., 637 F.2d 685, 688 n.4
 (9th Cir. 1981) (application of Davis factors).
      If we were to analyze this case under the Davis factors, it is clear
 that exhaustion would be required.  Appellants suffer no injury from
 pursuit of the administrative remedy; they have already obtained a ruling
 from the Board.  In numerous cases, we have recognized the specialized
 expertise of the Board in determining whether it has jurisdiction over a
 particular development proposal.  See In re Manosh Corp., 147 Vt. 367, 370,
 518 A.2d 18, 20 (1986) (the Court will "defer to the Board's expertise").
 At best, the jurisdictional issue is close.
      Analysis of the facts of the present case under the Davis factors also
 demonstrates that there are no extraordinary circumstances here to excuse
 nonpreservation of the jurisdictional issue under { 6089(c).  Appellants
 even characterized their own proposal as an amendment to their preexisting
 permit, leading the Board away from a critical examination of its juris-
 diction.  If ever we will require preservation in the Board, this is the
 case to do it.
      Our analysis of this particular case shows the strong policy reasons
 why we must apply the preservation statute to jurisdictional disputes.
 Moreover, the language of { 6089(c) is broad and contains no exception for
 jurisdictional issues.  This omission is significant because for an adminis-
 trative board of limited jurisdiction virtually any disagreement with its
 actions can be phrased in jurisdictional terms.  Indeed, the vast majority
 of Act 250 appeals involve jurisdictional issues, and in resolving them, we
 have accorded "a high level of deference" to the interpretation of Act 250
 by the Board.  In re Vitale, 151 Vt. 580, 582, 563 A.2d 613, 615 (1989).  If
 we adopt appellants' position, applicants will be able to avoid raising
 jurisdictional challenges before the Board, and seek a ruling for the first
 time in this Court if they are dissatisfied with the Board's action on the
 merits.  As a result, the most important decisions on the scope of Act 250
 will be made without involvement of the Board or its expertise.  See McKart
 v. United States, 395 U.S. 185, 195 (1969) ("frequent and deliberate
 flouting of administrative processes could weaken the effectiveness of an
 agency by encouraging people to ignore its procedures").  We must construe
 the preservation statute consistent with its plain meaning as well as "'the
 subject matter, its effects and consequences, and the reason and spirit of
 the law.'"  Nash v. Warren Zoning Board, 153 Vt. 108, 112, 569 A.2d 447, 450
 (1989) (quoting In re R.S. Audley, Inc., 151 Vt. 513, 517, 562 A.2d 1046,
 1049 (1989)).  When we do, we must require preservation of all issues even
 if they go to the subject-matter jurisdiction of the Board.  The exception
 for extraordinary circumstances provides a sufficient safety valve to
 protect against excusable failures, especially if they involve clear
 questions of law on which Board expertise is less important.
      Because appellants had a duty to raise the issue of jurisdiction
 before the Board, and failed to do so, they are foreclosed by { 6089(c)
 from raising it here, and we need not address its merits.
      Next, we turn to appellants' claims of substantive error by of the
 Board.  A number of these claims center around the Board's findings of fact
 and conclusions of law with respect to the aesthetic impact of the proposed
 subdivision.  We note that we must affirm findings of the Board if based on
 "substantial evidence," 10 V.S.A. { 6089(c), which is evidence properly
 before the Board that is relevant and which a reasonable person might accept
 as adequate to support a conclusion.  In re McShinsky, 153 Vt. 586, 589, 572 A.2d 916, 919 (1990).
      Appellants first argue that the Board improperly allocated the burden
 of proof in finding that the subdivision would have an adverse effect on the
 aesthetics of the area without adherence to the permit conditions.  The
 Board or Commission granting a permit is required to find that a subdivision
 "[w]ill not have an undue adverse effect on the scenic or natural beauty of
 the area, aesthetics . . .  and irreplaceable natural areas."  10 V.S.A. {
 6086(a)(8).  Although the applicant has the burden of proof on many Act 250
 issues, the burden of proof with respect to aesthetics is "on any party
 opposing the applicant . . . to show an unreasonable or adverse effect."
 Id. { 6088(b).
      In this case, no opponent of the  permit appeared or presented evidence
 before the Board.  The Board's finding that adherence to its conditions
 would be necessary to prevent an adverse aesthetic effect was based, rather,
 on testimony by Chester Denio and on information gained through its visit to
 the site.  Appellants claim that the Board was precluded from finding
 against them on an issue for which they did not bear the burden of proof,
 particularly as no party bearing that burden ever came forward.  We conclude
 that the Board was not so precluded.
      Nothing in the language of the statute prevents the Board from finding
 against the applicant on an issue even though the applicant does not have
 the burden of proof on that issue.  In fact, the statute requires the Board
 to make a finding on each factor, including aesthetics, irrespective of the
 placement of the burden of proof.  Id. { 6086(a).  In this context, the
 allocation of the burden of proof to opponents merely relieves the applicant
 of the "risk of non-persuasion," and means that in the absence of evidence
 on the issue, or where the evidence is indecisive, the issue must be decided
 in the applicant's favor.  In re Quechee Lakes Corp., 154 Vt. 543, 553, 580 A.2d 957, 963 (1990); see also 4 J. Stein, G. Mitchell, B. Mezines,
 Administrative Law { 24.01, at 24-5 to 24-8 (1991).  The burden of proof
 allocations of Act 250 impose "no limits, direct or indirect, on the
 evidence the Board is allowed to consider in deciding whether a particular
 issue has been proved."  Quechee Lakes Corp., 154 Vt. at 553, 580 A.2d  at
 963.  While the applicant never bears the risk of nonpersuasion of the
 Board as to the aesthetics criterion, the burden of proof is properly
 satisfied by the actual proof of adverse aesthetic effect, "'regardless of
 which party introduces the evidence.'"  Id. (quoting Parish v. Maryland &
 Virginia Milk Producers Ass'n, 261 Md. 618 691-92, 277 A.2d 19, 54 (1971))
 (emphasis in original); see also Burroughs Corp. v. Rocky Mt'n Prestress,
 Inc., 431 F.2d 1185, 1187 (10th Cir. 1970) (party may be relieved of burden
 imposed on it by fact that the necessary proof is introduced by adversary).
 Moreover, the rules of the Environmental Board contemplate circumstances in
 which no party appears in opposition to a permit issuance or no opponent
 presents evidence on the issues for which opponents bear the burden of
 proof, and permit the Board "to make reasonable inquiry as it finds
 necessary to make findings and conclusions as required."  Vermont
 Environmental Board Rule 20(C).  The absence of opposition does not mean
 that appellants automatically prevail on the aesthetics issue.
      In this case, the Board properly examined the issue of aesthetics, for
 which it was required to make a finding, and considered substantial evi-
 dence, as discussed below, placed before it by the Denios and found by it
 on its visit to the site.  Only if there had been no substantial evidence
 before the Board on the issue of aesthetics, or if it had been unable to
 conclude one way or the other based on the evidence before it, would the
 statutory burden of proof allocation have required a finding in favor of
      Appellants next claim that the Board failed to comply with the
 requirement set forth in the Administrative Procedure Act, 3 V.S.A. {
 809(g), that its findings of fact be based "exclusively on the evidence and
 on matters officially noticed."  Their argument here is that the Board could
 consider only the testimony of Chester Denio and his exhibits, the only
 evidence taken by the Board.
      Many of the findings which appellants attack are derived in part from
 the site visit.  As long as it does not constitute the exclusive basis for
 the Board's decision, evidence gathered during a site visit may satisfy the
 burden of proof on the factors to be considered in granting an Act 250
 permit.  Quechee Lakes Corp., 154 Vt. at 552, 580 A.2d  at 962; In re
 McShinsky, 153 Vt. at 589, 572 A.2d  at 918.  Ordinarily, the Board is
 required to enter its observations from the site visit on the record to
 allow rebuttal and facilitate review.  Quechee Lakes Corp., 154 Vt. at 552,
 580 A.2d  at 962.  Appellants waived this requirement, however, by failing to
 raise it in response to the Board's proposed decision.  Id.  Thus, we are
 unable to determine the extent to which the Board relied on the site visit
 and must affirm the relevant findings.
      The remaining findings to which appellants object as not based upon the
 record are actually statements of appellants' intentions as derived from
 their application to the District Commission.  To the extent that they are
 findings of fact, we find adequate support for them in the permit applica-
 tion and the testimony, charts and photographs before the Board.  In any
 event, appellants' real objection to these "findings" is their use to
 create permit conditions.
      Appellants next argue that the Board's conclusion that conditions were
 required to prevent an undue adverse aesthetic effect, see 10 V.S.A. {
 6086(a)(8), was erroneous.  The Board used the two-step analysis noted in In
 re McShinsky, 153 Vt. at 591, 572 A.2d  at 919-920, in which it first
 determined whether the proposed subdivision would have an adverse aesthetic
 impact and then looked at whether that impact would be undue.  It found an
 adverse impact from the destruction of open space in proximity to the
 existing development and in the visibility of the new houses to vehicles
 passing on Route 7A.  It went on to find that this adverse effect was not
 undue, if the land uses would be as appellants proposed, because of the
 presence of an old wood barn on open land directly across the entrance road
 from the development site and the presence of Christmas trees on a parcel
 that borders Route 7A.  Appellants challenge the Board's conclusion that the
 barn and the Christmas trees are necessary to avoid an undue adverse effect.
      We emphasize that "decisions made within the expertise of an admin-
 istrative agency are presumed to be correct, valid and reasonable . . . and
 we will normally defer to its determinations."  Vermont State Colleges
 Faculty Federation v. Vermont State Colleges, 151 Vt. 457, 460, 561 A.2d 417, 419-20 (1989) (citations omitted); see also In re Burlington Housing
 Auth., 143 Vt. at 83, 463 A.2d  at 217 (Environmental Board's application of
 Act 250 entitled to presumption of validity).  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.  Quechee Lakes Corp., 154 Vt. at 555,
 580 A.2d  at 963.
      The evidence here supports the Board's conclusions.  As originally
 designed, the development was largely shielded from Route 7A.  The new
 units will bring visibility.  In addition, they will be built on open land
 that served as an aesthetic buffer.  Other features of the appellants'
 property, particularly the barn and the Christmas tree farm, mitigate the
 degree of adverse effect as long as they remain in their current uses.  We
 find no error in the Board's conclusions.
      Appellants' final attack is on twelve of the twenty permit conditions
 imposed by the Board. The Board's authority to impose specific conditions on
 the grant of an Act 250 permit is contained in 10 V.S.A. { 6086(c) which
         (c) A permit may contain such requirements and con-
         ditions as are allowable within the proper exercise of
         the police power and which are appropriate with respect
         to (1) through (10) of subsection (a), including but not
         limited to those set forth in sections 4407(4), (8) and
         (9), 4411(a)(2), 4415, 4416 and 4417 of Title 24, the
         dedication of lands for public use, and the filing of
         bonds to insure compliance.

 Any conditions imposed must be "reasonable."  Quechee Lakes Corp.,  154 Vt.
 at 550 n.4, 580 A.2d  at 961 n.4.
      Appellants launch a barrage of objections at the permit requirements;
 we will not discuss each objection in detail.  Appellants were given the
 opportunity to respond to the proposed decision of the Board, including the
 proposed permit conditions, and failed to raise many of the objections they
 raise here.  To the extent appellants failed to object before the Board,
 they have waived their objection.  10 V.S.A. { 6089(c).
      Appellants did preserve an objection to conditions Nos. 7, 8, 9 & 10.
 These conditions require that certain parts of appellants' 263 acres be
 maintained at or near their current condition.  An area known as the
 "greenbelt" was required to be left as open space or used for "forestry or
 agricultural purposes."  The area on which the barn is located was required
 to be maintained as open space.  The area in which Christmas trees were
 being grown was required to be used for "agricultural or forestry purposes,"
 maintaining a line of maple trees.  Another line of trees immediately
 adjacent to the area to be developed was required to be maintained.
      Most of appellants' objections are resolved by the Board's
 determination that the original permit implicated the entire 263 acres owned
 by appellants and treatment of the current proposal as an amendment to that
 permit.  As discussed in part I of this opinion, the appellants' failure to
 contest that determination in the Board proceeding precludes a challenge to
 it here.  As a result, appellants' argument that the Board is powerless to
 dictate the use of land outside the permit application is answered by the
 fact that we must accept the Board's conclusion that all of appellants' land
 is involved in this proceeding.
      The conditions were imposed to leave open space in appellants' planned
 residential development and to implement the Board's findings on aesthetic
 impact pursuant to 10 V.S.A. { 6086(a)(8).  The requirement of open space in
 planned residential developments for recreation and to maintain natural
 beauty is well accepted.  See 24 V.S.A. { 4407(3).  We find no basis to hold
 these conditions unreasonable.  If circumstances change, appellants have the
 opportunity to seek modification of the permit as they have done here.
      The last preserved objection is to condition No. 1.  That condition
 requires appellants to complete the project consistent with the Board's
 findings and conclusions and the approved plans and exhibits.  It goes on to
 state that in event of a conflict between the findings and conclusions, on
 the one hand, and the plans and exhibits, on the other, the findings and
 conclusions will govern.  Appellants argue that this condition creates an
 unreasonable restriction on their title because of the inability to easily
 follow the findings, conclusions and plans and because they are vague.
 Before the Board, they argued that the approved plans should take precedence
 in case of conflict.
      We have affirmed a similar order in a zoning case.  In re Duncan, 155
 Vt. 402, 410, 584 A.2d 1140, 1145 (1990).  We see no reason to adopt a
 different standard for Act 250 review.  The necessary result of detailed
 environmental review, as contemplated by Act 250, is that restrictions on
 land use will not be simple to state or even to ascertain.  That concern is
 addressed in part by the requirement that permits, including their con-
 ditions, be recorded in the land records.  See 10 V.S.A. { 6090(a).  Persons
 coming upon this permit will know that they have to also look at the find-
 ings, conclusions and plans.  The Board can review only what is presented to
 it so that its findings and conclusions are a necessary ingredient to
 determining what it has approved.  We believe that this condition is
 reasonable under the circumstances.

                                         FOR THE COURT:

                                         Associate Justice