Title: Vermont North Properties v. Village of Derby Center

State: vermont

Issuer: Vermont Supreme Court

Document:

Vermont North Properties v.
Village of Derby Center (2012-457)
 
2014 VT 73
 
[Filed 18-Jul-2014]
 
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 by email at: JUD.Reporter@state.vt.us or by
mail at: 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.
 
 
2014 VT 73
 
No. 2012-457
 
Vermont North Properties
Supreme Court
 
 
 
On Appeal from
     v.
Superior Court, Orleans Unit,
 
Civil Division
 
 
The Village of Derby Center
November Term, 2013
 
 
 
 
Robert
  P. Gerety, Jr., J.
 
Philip H. White of Wilson & White, P.C., Newport, for
Plaintiff-Appellant.
 
Christopher J. Smart of Cheney Saudek & Grayck PC, Montpelier,
for Defendant-Appellee.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Robinson and
Crawford, JJ.
 
 
¶ 1.            
ROBINSON, J.   Developer Vermont North Properties (VNP)
appeals from the trial court's decision in favor of the Village of Derby Center
in this declaratory judgment action.  This dispute concerns VNP's rights,
if any, to water and sewer allocations from the systems managed by the Village
in connection with a VNP construction project.  The trial court determined
that: the Village could charge fees for reserved water and sewer allocations;
the Village's fees were reasonable; the Village could revoke VNP's reserved
allocations for nonpayment of fees; and the Village was not estopped from
denying water and sewer connections to VNP on account of nonpayment.  For
the reasons set forth below, we conclude that VNP has enforceable reserved
water and sewer allocations, but the Village may charge equitable fees for
these reservations and may revoke the reservations for nonpayment.  We
further conclude that VNP has failed to meet its burden of demonstrating the
unreasonableness of the Village's reservation fees, and on that basis we affirm
the trial court's decision.
I.
¶ 2.            
VNP filed this declaratory judgment action in June 2007.  It
asserted in its complaint, among other things, that it had obtained a vested
right to certain allocations of reserved water and sewer capacity from the
Village in 1987, that the Village had no authority to charge it a fee for these
reservations, and that the sewer and water rates the Village sought to charge
for the reservations were irrational, inequitable, and unlawful.  The
Village adopted new ordinances in 2008, and VNP filed an amended complaint with
additional allegations relating to these ordinances and to other events that
post-dated its original complaint.  VNP asserted that the Village had
improperly issued it a new permit in 2008 for provisional allocations of water
and wastewater, and that the permit inappropriately provided that VNP's provisional
allocations would expire on February 28, 2009 unless VNP either completed
construction or applied to extend the deadline for good cause.  VNP argued
that, to the extent that the Village was threatening to rescind VNP's reserved
water and sewer capacity, it was doing so in derogation of VNP's vested,
grandfathered rights to such capacity.  
¶ 3.            
Following a bench trial, the court adopted the parties' stipulated facts
and made additional findings.  Its decision thus reflects the
following.  In 1987, VNP purchased land in the Village.  The sellers
of the property had previously obtained a state permit to build "44 housing
units in 8 buildings with a store/laundry facility" on the site.  VNP
planned to build eight buildings on the property, each containing six
residential units.  The buildings were to be constructed over time, based
on market demand.  
¶ 4.            
In March 1987, VNP applied for amended state permits to allow water and
wastewater connections.  Shortly thereafter, in connection with that
state-permitting process, the Village clerk sent a letter to the state
indicating that "water and sewer are available at the property."  The
clerk did not specify any specific quantity of water or wastewater capacity
available for this project.  She did not state how long water and sewer
services would be reserved.  VNP understood this letter to be a commitment
on the part of the Village to provide water and sewer necessary for the
project.  In July 1987, based, in part, on the letter from the Village
clerk, the state issued a permit to VNP to construct two buildings, each with
six units.  VNP's first building was built and connected to the Village
system in 1988.
¶ 5.            
The process for obtaining water and wastewater reservations and allocations
from the Village was informal at the time; the Village did not have an
ordinance relating to "reservations" or "allocations" of water or wastewater
capacity, and Village trustees did not formally vote to approve a reservation
of water and sewer capacity for VNP prior to the Village clerk sending the 1987
letter.  The Village did not charge any fees for reservation of water or
wastewater capacity during this period.
¶ 6.            
In 1989, a new state statute required that municipal wastewater capacity
be allocated pursuant to ordinances or bylaws.  See 24 V.S.A.
§ 3625.  Until such ordinances or bylaws were adopted,
municipalities' authority to allocate capacity was limited in amount and scope.
 Id. § 3625(b)(1)-(3).  These provisions did not apply,
however, "to capacity that is committed or allocated before July 1,
1989."  Id. § 3625(e).
¶ 7.            
In 1992, in response to the new state statute, the Village adopted its
first wastewater allocation ordinance.  Not long thereafter, the Village sought
legal advice from its attorney on whether it could charge a fee for reserving
wastewater capacity prior to connection.  The Village attorney opined that
the Village could impose reservation fees but that any new ordinance should not
be applied retroactively.  
¶ 8.            
In August 1993, the Village and the Town of Derby adopted a joint
wastewater allocation ordinance, which replaced the Village's 1992 ordinance;
they also adopted a joint water ordinance.[1]  Thereafter, the Village began
charging water and wastewater reservation fees for newly allocated but unused
water and sewer capacity prior to connection.  It has charged these fees
ever since.  Sewer reservation fees were apparently imposed following
trustee approval of a project at a rate of 25% of the established sewer
rates.  The fees were charged until a water meter was installed, at which
time a "connection fee" apparently was imposed.[2]  In early 1994, consistent with his
earlier advice, the Village attorney advised the Village trustees that they
could not "charge connection fees to projects that received approval before the
connection fees were in place."  
¶ 9.            
In March 1994, VNP applied to the Village to connect the water and sewer
for the second of the two buildings for which it had received state approval in
1987.  Although no formal vote of approval had ever been taken by the
Village trustees, the trustees decided at an April 1994 meeting that: "Water
application 94-3 from VT North and VT North's Sewer Application 94-3
are . . . grandfathered in.  The condominium project
was allocated its water and sewer prior to the new ordinances.  No action
was necessary."  
¶ 10.        
Shortly after the meeting, the Village sent VNP a form letter regarding
VNP's water and sewer applications 94-3.  The letter thanked VNP for
submitting information about its project, but stated that because the water and
sewer allocations to VNP predated the effective date of the water
allocation/sewer allocation ordinances, another approval was not
necessary.  The letter also provided that because "the water/sewer
approval(s) predate(s) the initiation of connection fees, the project is not
subject to connection fees.  Connection(s), however, will have to be
inspected prior to being covered and you will be subject to the applicable
ordinances."  
¶ 11.        
VNP constructed and connected its second building to the Village system
in late 1994.  Seven years later, upon application by VNP, the state
issued an amended permit in June 2001 allowing VNP to construct the third
building in its project.  VNP subsequently constructed its third building,
which was also connected to the Village's systems.  The Village's records
regarding allocations of sewer services from 1994-2001 state that VNP had
10,800 gallons of "committed reserves."  
¶ 12.        
Around 2004, the Village believed that it had run out of wastewater
capacity.  It learned that the state determined available wastewater
capacity by adding the Village's actual discharges to the Village's
reservations for prospective capacity as shown on a list maintained by the
state.  At the time, the combination of actual discharges and reservations
appearing on the state's list approached the Village's capacity.  The
Village initiated a wastewater moratorium, began negotiating with the City of
Newport to procure additional capacity, and began reviewing the state's
reservation list to identify reservations that had not actually been approved
by the Village, or that had expired.  
¶ 13.        
In 2005, VNP secured a state permit and connection approval from the
Village for an additional 1800 gallons per day (gpd) of water and sewer capacity
in connection with construction of a fourth building.  The Village
sewerage capacity permit included an expiration date forty months after the
date of issuance if construction did not begin on the units for which the
allocation was reserved within that time frame.  The fourth building was
constructed and connected in October 2005.[3]  
¶ 14.        
The Village determined around 2005 that it had not actually allocated
water and sewer capacity to VNP as previously indicated, and that VNP's water
and sewer allocations were not "grandfathered."  Accordingly, pursuant to
its 1993 ordinance, in 2006 the Village began billing VNP for its
reservations.  VNP objected to the bills and initially refused to pay them,
and the Village indicated that unused water and sewer allocations would be
revoked.  
¶ 15.        
Also in 2006, under the authority of the 1993 ordinance, the Village
trustees adopted new water and wastewater fees.  The new methodology
charged those who reserved water and wastewater capacity at 100% of the rate
for actual usage, it being noted that, under state and federal law, 100% of
those reservations were assessed against the Village's capacity, as though the
reservations reflected actual usage.  The methodology also included a 30%
surcharge on those deemed to be large users and those reserving large
allocations, such as VNP.[4] 
The Village's 2006 fee structure for allocated but as yet unused water and
sewer capacity was applied in a uniform and nondiscriminatory manner.  It
was designed, in part, to discourage residents and developers from holding
unused capacity unnecessarily and unreasonably.  
¶ 16.        
VNP eventually paid its outstanding bills in mid-2007 "under protest." 
The parties stipulated, and the trial court ordered, that during the pendency
of this action the Village will hold 5040 gpd of allocationthe amount required
for the uncompleted portion of VNP's project, as long as VNP timely pays
reservation fees.  As of their March 2012 stipulation, the parties were in
compliance with their respective obligations.
II.
¶ 17.        
Based on these and other findings, the court turned to VNP's
claims.  It first concluded that the Village was authorized by local water
and sewer ordinances, and by state law, to charge fees for reserved water and
sewer allocations.  The court concluded that the power to charge
reservation fees was implied in the Village's general power to manage its water
system and was supported by the applicable state statute concerning wastewater
systems.[5] 

¶ 18.        
The court next addressed VNP's assertion that, assuming the fees were
lawful, the Village could not revoke the reservations for nonpayment and that its
threats to do so were unauthorized, unreasonable, and retaliatory.  The
court rejected this argument.  It noted that the 1993 water and wastewater
ordinances authorized the Village to revoke for nonpayment.  In this case,
the Village had followed the statutory procedure for disconnecting delinquent
water or sewer users.  See 24 V.S.A. §§ 3504, 5141-5145.  VNP
argued that this statutory scheme, specifically 24 V.S.A. § 5146, required
that service be restored within twenty-four hours of payment of outstanding
bills.  It maintained that the Village could not comply with this
requirement if it permanently revoked and reassigned VNP's allocations because
there was no excess capacity available.  The court concluded that the
Village was not bound by § 5146 in the circumstances of this case because
only unused allocations were terminated and the purpose of the disconnection
statutes was to provide a remedy where there was an interruption of existing
service.  
¶ 19.        
VNP next argued that the rates set by the Village were irrational and
discriminatory because VNP was asked to pay for its reservations as if the
entire amount of the allocations was actually used, and because the Village
levied a 30% surcharge on VNP as a "large user."  VNP argued that these
rates were not reasonably related to the Village's costs and expenses. 
The court recognized that the Village had wide latitude in setting rates and
that its rates were presumed to be reasonable.[6]  After discussing relevant case law,
the court concluded that the Village's rates were equitable.  The court
explained that the Village used a computer program that applied equally to all
persons with reservations, with the only variable being the amount of the
reservation.  The Village claimed that it charged in full for the
reservations because such reservations were counted in full against the
Village's limited wastewater capacity, and it sought to discourage
speculators.  The court found this rationale persuasive and concluded that
the rates charged by the Village were fair.  The court did not directly
address the 30% surcharge for large users.  
¶ 20.        
Finally, the court turned to VNP's estoppel argument.[7]  In its pretrial memorandum, VNP
argued that the Village had determined in 1993 that VNP's water and sewer
allocations were grandfathered and exempt from the imposition of fees, and that
the Village reiterated this position to VNP in 1994.  According to VNP,
the Village was therefore equitably estopped from arguing that the wastewater
and water allocations were not grandfathered.  In a post-trial filing, VNP
argued that its sewage allocation was "grandfathered" under 24 V.S.A.
§ 3625(e) because it "acquired" its wastewater allocation from the Village
before July 1, 1989.  It asserted that the Village should be estopped from
asserting that this statutory provision did not apply or that VNP's allocations
were not grandfathered.  VNP pointed to the fact that it had not been charged
for its allocations for thirteen years.  
¶ 21.        
The court concluded that although the Village told VNP in 1994 that it
was grandfathered, that statement was based on an erroneous belief that the
prior trustees had granted permanent allocations of water and sewer to
VNP.  The Village was not aware of the facts at the time it decided to
"grandfather" VNP's water and sewer connections.  Given this, the court
concluded that VNP did not establish one of the essential elements of a claim
of estoppel against a government entity.  The court also found that any
unfairness or perceived injustice that might result from the denial of VNP's
request for an order estopping the Village from terminating VNP's rights was
outweighed by the negative impact such an order would have on the Village's
responsibility to fairly and reasonably manage the allocation of its available
water and sewer connections among its residents.  The court thus entered
judgment for the Village with respect to all of VNP's claims.  VNP appealed.
III.
¶ 22.        
On appeal, VNP argues that, assuming the Village has the authority to
charge VNP for its reserved allocation, the rate structures adopted by the
Village in 2006 and in 2008 are unjust, unreasonable, and inequitable. 
Second, VNP argues that the Village lacks the authority to revoke VNP's
wastewater or water allocations for nonpayment or for any other reason. 
Finally, VNP asserts that it acquired its water and wastewater allocations from
the Village in 1987 and that these allocations were properly deemed
grandfathered in 1993-94.  According to VNP, it is exempt from
subsequently adopted rates, ordinances, and special assessments imposing new
fees on these allocations.  Alternatively, VNP argues that the Village is
estopped from now denying that VNP's reserved allocation is
grandfathered.  VNP also asserts that the Village is barred by the
doctrine of laches from challenging the validity of its allocations.
A.
¶ 23.        
We begin with the estoppel argument, as it is potentially
dispositive.  If the Village has granted VNP a perpetual and cost-free
reservation that is grandfathered pursuant to 24 V.S.A. § 3625(e), or if
it is estopped from taking action inconsistent with this position, then the
reasonableness of the Village's 2006 and 2008 rate structures is
immaterial.  As indicated above, the trial court rejected VNP's assertion
that the Village was estopped from denying it water and sewer
connections.  We review de novo the court's legal conclusion as to the
applicability of equitable estoppel.   In re Lyon, 2005 VT 63,
¶ 15, 178 Vt. 232, 882 A.2d 1143; see also Cold Brook Fire Dist. v.
Adams, 2008 VT 28, ¶ 6, 183 Vt. 614, 950 A.2d 1206 (mem.) (stating in
context of estoppel analysis that Supreme Court reviews trial court's legal
conclusions de novo and "will uphold such conclusions only when they are
reasonably supported by the court's findings of fact").  The first
question, then, is, given the stipulated and found facts, what rights, if any,
did VNP acquire with respect to reserved water and wastewater allocations in
1987, 1994 or thereafter?    
1.
¶ 24.        
The 1989 statute, 24 V.S.A. § 3625, requires that a municipality's
wastewater capacity be allocated in accordance with an ordinance, bylaw, or
interim bylaw.  Id. § 3625(a).  The statute further
limits the extent and terms of any allocations undertaken by a municipality
subsequent to the statute's effective date, but prior to the municipality's
enactment of an ordinance or bylaw.  Id. § 3625(b), (c). 
The statute does not apply to capacity that is "committed or allocated" before
July 1, 1989.  Id. § 3625(e).  The term "committed" is
defined to require formal action by a legislative body, id., and the
term "allocated" is undefined.  The Village adopted an ordinance pursuant
to this statute in 1992, and then approved VNP's requested connection in 1994,
concluding that the allocation was grandfathered pursuant to the statute. 
We need not determine whether the wastewater capacity in question was, in fact,
grandfathered pursuant to the 1989 statute because we conclude, based on the
undisputed facts, that the Village is estopped from denying that VNP has
reserved water and sewer rights.
¶ 25.        
Faced with a request to connect after adopting the ordinance, the
trustees, in a duly warned 1994 public meeting, concluded that VNP's
allocations of water and wastewater capacity for the condominium project were
not subject to the ordinance because they were grandfathered.  The meeting
minutes specifically reflect that the water and sewer requirements of VNP's
condominium project "are . . . grandfathered in," and note
that "[t]he condominium project was allocated its water and sewer prior to the
new ordinances.  No action was necessary."  The Village allowed
connection of VNP's third building on that basis.  The Village's records
regarding allocations of sewer services from 1994-2001 reflect inventories of
committed wastewater capacity thereafter that continued to reflect the
allocation to VNP, and its conduct in connection with the 2001 hook-up of the
fourth building reinforced its 1994 determination.  On these stipulated
and found facts, even if the Village is correct in arguing that VNP's
allocations did not actually qualify to be grandfathered in 1993, the Village
cannot come back in 2006well over a decade laterand disavow the documented
1994 determination of the trustees, and the Village's actions then and
thereafter, by asserting that the trustees were mistaken, and denying that the
water and sewer allocations were grandfathered.  
¶ 26.        
As we have explained, "[t]he doctrine of equitable estoppel precludes a
party from asserting rights which otherwise may have existed as against another
party who has in good faith changed his position in reliance upon earlier
representations."  Lyon, 2005 VT 63, ¶ 16 (quotation
omitted).  The doctrine "is based upon the grounds of public policy, fair
dealing, good faith, and justice, and its purpose is to forbid one to speak
against his own act, representations or commitments to the injury of one to
whom they were directed and who reasonably relied thereon."  Id.
(quotations omitted).  While "[e]stoppel is not a defense that should be
readily available against the state, . . . neither is it a
defense that should never be available."  Id. (quotations omitted).
 Thus, "[w]hile the doctrine of estoppel must be applied with great
caution when the government is the involved party, nevertheless when a
government agent acts within [the agent's] authority, the government can be
estopped by [the agent's] actions."  Id. ¶ 17 (quotation
omitted).  
¶ 27.        
A party seeking equitable estoppel against the government must establish
all of the following elements: (1) the party to be estopped must know the
facts; (2) the party being estopped must intend that his conduct be acted upon;
(3) the party asserting estoppel must be ignorant of the true facts; (4) the
party asserting estoppel must rely on the conduct of the party to be estopped
to his detriment; and (5) the party seeking to estop the government must
demonstrate that "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."  Id.
(quotations omitted).  
¶ 28.        
We first conclude, contrary to the trial court's conclusion, that based
on the undisputed facts, the Village is properly charged with knowledge of the
facts in this case.  The Village's knowledge, particularly to the extent
reflected in its meeting minutes and letters in its file, cannot depend on who
happens to be at a particular meeting of trustees, and it does not dissolve
with a new election.  This is not a case where the Village was at the
disadvantaged end of an information asymmetry.  The record establishes
that VNP did not have any information that the Village did not.  The
Village's own records are part of its knowledge, and the records put the
Village on notice as to the "true facts" concerning VNP's allocations.  In
particular, the Village had knowledge of the 1987 letter and the extent to
which the Village had treated VNP as having reserved wastewater
allocations.  At the same time, a simple review of prior meeting minutes
would have shown that the trustees never themselves made a formal allocation of
water or wastewater capacity.  To the extent that the Village now argues
that the trustees in 1994 mistakenly believed that they had previously, by vote
of the trustees, permanently allocated wastewater and water capacity, such a
mistaken belief, not induced by any representations by VNP, and inconsistent
with the Village's own records, does not amount to a lack of knowledge of the
facts so as to defeat VNP's estoppel claim.
¶ 29.        
To the extent that the Village now argues that the trustees in 1994 were
mistaken in their understanding of the applicable law as to the clerk's
authority to issue allocations, or the effectiveness of the wastewater
allocation in the face of 24 V.S.A. § 3625, such mistakeif it was
mistaken at alllikewise does not amount to a lack of knowledge that defeats an
estoppel claim.  The Village trustees were acting as water and sewer
commissioners for the Village, and were charged with supervising the water and
sewer systems.  See id. § 3506(a) (providing that village
trustees shall constitute board of sewage system commissioners unless
legislative body of municipality votes to constitute a separate board of sewage
system commissioners); id. § 3507 (stating that sewage system
commissioner shall supervise municipal sewage system and "make and establish
all needed rates for rent, with rules and regulations for its control and
operation").[8] 
In this role, the trustees are properly charged with knowledge of the law,
including the terms of the 1989 statute that provided for grandfathering of
wastewater allocations.  See Lyon, 2005 VT 63, ¶ 19 (finding
that because state agency's regional engineer was a duly authorized agent of
government whose responsibilities included properly advising public regarding
issuance of wastewater permits, he was reasonably charged with knowing laws
governing his duties).  The Village must bear the consequences of its
misinterpretation of that statute, if any, under the circumstances here.  
¶ 30.        
The trial court did not reach the remaining elements of estoppel (with
the exception of its conclusion that no injustice would ensue from refusing to
estop the Village here).  Accordingly, we base our remaining analysis on
the stipulated and found facts.  With respect to the second element of
estoppel, it is evident that the Village intended that its conduct be acted
upon.  When the Village informed the state that water and sewer were
available for VNP's development project, VNP was able to obtain necessary state
permits.  In 1994, the trustees told VNP that its water and sewer
applications were "grandfathered in," and that VNP had secured its water and
sewer allocations prior to the effective date of the 1993 ordinance.  For
that reason, the trustees found it unnecessary to take any action on VNP's 1994
applications.  
¶ 31.        
The trustees reiterated to VNP in writing in 1994 that VNP's water and
sewer allocations predated the effective date of the new ordinances, and that
VNP therefore did not need to obtain another approval from the Village. 
VNP subsequently constructed and connected several buildings without paying a
connection fee. The Trustees here did not merely give VNP advice as to its
legal status; the Trustees' meeting minutes and subsequent actions reflect a
determination that VNP was grandfathered.  Indeed, the Village's own
conduct in this caseseeking to bill VNP for the reserved and yet-unused
capacityreflected its own reliance on the 1994 determination that VNP did, in
fact, have unused reserved capacity. 
¶ 32.        
As to the third element, we conclude that VNP was ignorant of the true
facts.  The trial court expressly found that VNP understood the 1987
letter from the Village clerk to be a commitment on the part of the Village to
provide water and sewer necessary for its project and that the commitment was
not time-limited.  While VNP undisputedly knew that there had never been a
meeting where the trustees formally approved certain levels of water and sewer
allocations, it is also undisputed that it did not know that such action was
required.  The trustees informed VNP that it did not need to take any
action under the existing ordinance because its allocations were
grandfathered.  Even if the trustees' conclusion reflected a misapplication
of the law, we do not require VNP to know the law better than those charged
with administering it.  See Lyon, 2005 VT 63, ¶ 21 (stating
that Court "will not require permit applicants to know the law better than the
government agency charged with administering it," particularly where permit
recipients reasonably relied on expectation that permit was issued in
compliance with the law).  
¶ 33.        
The trial court's findings reflect that VNP relied on the Village's
conduct to its detriment.  VNP needed allocated capacity to develop its
property and it was led to believe, essentially from the commencement of its
project, that the Village was holding such reserved capacity on its
behalf.  The parties stipulated that since 1987, VNP has invested money in
the infrastructure necessary to connect its buildings, and the trial court
found that VNP spent a total of approximately $250,000 for the infrastructure
to support both the built and the unbuilt buildings to which the alleged water
and sewer allocations related.  
¶ 34.        
Finally, given the scope of VNP's reservation, discussed more fully
below, we conclude that "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 this case."  Id.
¶ 17 (quotation omitted).   Given the unusual circumstances of
this case, in which the Village formally acknowledged the allocations in a
meeting of the trustees, and then through its conduct reaffirmed its recognition
of the allocations for more than a decade, and given VNP's reasonable reliance
on the Village's representations, we conclude that the injustice in this case
outweighs any countervailing public interest implicated by estopping the
government.  If VNP was misinformed byand reasonably relied uponan
action of the Village trustees and subsequent actions of a duly authorized
Village agent, application of estoppel does not offend public policy.  See
id. ¶ 26 (citing similar factor in considering this element of
estoppel, and concluding that State should be estopped from revoking
erroneously issued permit).  
2.
¶ 35.        
The conclusion that VNP acquired reservations of water and wastewater
capacity, either by direct action of the Village or through estoppel, does not
advance VNP's claim in this case that much.  The critical question
concerns the scope of the reservations and, in particular, whether the Village
could apply any amended fee structure to VNP's reservations.  Pursuant to
statute, a municipality can change its sewage-disposal and water rates from
time to time.  See 24 V.S.A. § 3615 (sewage-disposal rates); id.
§ 3311 (water rates).  There is no grandfathering provision in either
statute.  Neither connecting to a system, nor securing an allocation of
capacity pursuant to an ordinance or bylaw, shields a developer or consumer
from otherwise lawful changes in rates.  
¶ 36.        
We cannot conclude on this record that the Village is estopped from applying
otherwise lawful charges, imposed on other reserved allocations, to VNP's
reserved allocations.  The Village clerk's 1987 letter says nothing to
suggest that VNP's arguably reserved capacity is exempt from the municipality's
authority to prospectively change its ratesan authority reflected in the
statutes applicable at the time.  See 24 V.S.A. . § 3311
(1975) (providing, as in current statute, that municipal corporation may
"alter, modify, increase, or diminish" water rates from time to time, and may
"extend them to any description of property or use as such municipal
corporation may deem proper"); id. § 3615 (1975) (providing, as in
current statute, that commissioners "may change the rates of such [sewer]
charges from time to time as may be reasonably required").  The minutes
from the 1994 trustee meeting, and the 1994 letter from the trustees to VNP,
suggest, perhaps incorrectly, that the trustees opted not to apply the
reservation fees provided for in the 1993 ordinance to VNP's reservations. 
But the record could not support the conclusion that the Village thereby
exempted VNP from the ordinary peril of changing rates that faces any other
reservation-holder or water or wastewater disposal consumer.
¶ 37.        
If the Village tried to retroactively assess reservation charges back to
1994, it would certainly be barred by the same estoppel principles outlined
above from doing so.  But to the extent that it has exercised its
statutory authority to change rates prospectively, the trial court's findings,
and the underlying record, could not support the conclusion that the Village is
estopped from applying lawful, across-the-board rate changes to VNP.[9]  Thus, to the extent that VNP argues
that estoppel prevents the Village from asking it to pay for the reserved
capacity it has claimed, that argument fails.  
B.
¶ 38.        
We thus turn to the specific rates charged by the Village for reserved
sewer and water allocations.  We have never explicitly held that judicial
review of intraterritorial, as opposed to extraterritorial rates, is
appropriate.  See Handy, 156 Vt. at 404, 598 A.2d  at 118 (stating
that Vermont law, which does not distinguish between resident and nonresident
customers, requires that rates be fair, and reviewing connection rate charged
to extraterritorial customer); see also Robes v. Town of Hartford, 161
Vt. 187, 196, 636 A.2d 342, 348 (1993) (declining to reach the question and
noting, "the Handy decision was limited to a
holding that the reasonableness of a city's extraterritorial sewer
rates is an appropriate issue for judicial review' " (quoting Handy,
156 Vt. at 404, 598 A.2d at 118)).  The Village suggests in light of the
above that we lack the jurisdiction to review its intraterritorial rates, but
it offers no principled basis in the statute, our caselaw, or policy for
holding that we lack the authority to review intraterritorial rates although we
have the authority to review extraterritorial rates.  
¶ 39.        
To the extent that the statutes purport to regulate the reasonableness
of water or wastewater rates, they draw no distinction between rates charged to
residents and nonresidents.  Thus, although we declined to reach the
question in Robes because we did not have to, we see no reason to afford
judicial review to extraterritorial users but not intraterritorial users with
respect to a municipal water or wastewater system's rates.  Accordingly,
we reject the Village's argument that VNP's claim concerning the reasonableness
of the rates is unreviewable.  
1.
¶ 40.        
Our standard of review, however, is highly deferential.  The
statute regulating sewage-disposal charges identifies a host of factors on
which a municipal corporation may base its rates, and provides that the
municipality may use "any combination of these bases, so long as the
combination is equitable."  24 V.S.A. § 3615.  We have stated in
the context of sewer rates that our law "requires that rates be fair, equitable
and reasonable."  Handy, 156 Vt. at 404, 598 A.2d  at 118.  We
presume that the rates established by a lawful rate-fixing body are reasonable,
and those who challenge such rates "bear the burden of showing that they are
unreasonable."  Id.  VNP failed to meet its burden here.
¶ 41.        
As to the sewage rates, VNP argues that 24 V.S.A. § 3615 requires
that rates be related to "actual costs," and maintains there is nothing to show
that the Village has incurred any actual costs here.  VNP states that the
purchase of wastewater capacity at the Newport facility has been funded by a
bond, of which VNP has paid its share, and that the Village cannot justify
recovering those costs a second time by incorporating them into VNP's
rates.  VNP also argues that the Village is charged by the City of Newport
for actual flow but it is not charged any prorated amount for fixed operations
and maintenance at the wastewater facility itself.  According to VNP, it
therefore follows that the Village incurs greater expense related to actual
usage and wastewater flow than it does on reserved allocations and it is unfair
to charge the same rate for actual use and reserved allocations.  Finally,
VNP posits that the 30% surcharge must be unreasonable because the Village
failed to offer a rational justification to support it.[10]  
¶ 42.        
In addressing these arguments, we note that VNP expressly does not
challenge the Village's authority to charge fees for unused reserved wastewater
capacity.  Instead, VNP claims that charging the same rate for used and reserved
wastewater capacity is necessarily "inequitable."  Given the findings in
this case, we disagree.
¶ 43.        
Section 3615 contains numerous factors that can be used to set rates for
wastewater disposal, including some factors that are not use-dependent. 
See 24 V.S.A. § 3615 (providing that sewage commissioners "may establish
annual charges separately for bond repayment, fixed operations and maintenance
costs (not dependent on actual use), and variable operations and maintenance
costs dependent on flow").  Metered consumption of water on the premises
connected with the sewer system is one of a host of factors commissioners may
consider in setting ratessome of which do not necessarily reflect or even
relate to actual use.  Id.   The statute specifically
authorizes the commissioners to base rates upon the appraised value of
premises, in the event that they determine the sewage disposal plant to be of
general benefit regardless of actual connection.  Id.  The
statute allows the commissioners to use "any other equitable basis such as the
number and kind of plumbing fixtures, the number of persons residing on or
frequenting the premises, the topography, size, type of use, or impervious area
of any premises."  Id.  In short, the statute gives
municipalities broad discretion to consider factors other than actual use in
setting municipal sewage disposal rates.  See also Robes, 161 Vt.
at 191-92, 636 A.2d  at 346 (concluding under predecessor version of statute
that town acted equitably and exercised proper authority under § 3615 in
imposing impact fee on new developments to finance future expansion of town's
sewage capacity despite fact that fee was not based on actual use).  The
statutory standard the charges must meet is that they are "equitable." 
 24 V.S.A. § 3615.  
¶ 44.        
Given the findings that the Village is close to its maximum wastewater
capacity, and that the rate structure was applied in a uniform and
nondiscriminatory manner, we conclude that the trial court's conclusion that
the rates charged by the Village were fair and reasonable is supported by the
record.  As noted above, the Village is not tethered to a measure of
"actual cost" in setting its rates for reservations or service.  Moreover,
the concept of "actual cost" is itself complicated.  The Village's
use-based payment to the City of Newport is certainly one element of
cost.  But the parties stipulated that the Village pays the City of
Newport a pro-rated share on capital improvements based on unused reserved
capacity.  These payments are also part of the cost of reserved capacity
procured by the Village, but allocated to VNP.  
¶ 45.        
More significantly, in the not-so-long run, VNP's "use" of the capacity
in the form of holding it in reserve drives the utility's costs and need for
expansion just as if VNP was actually using the wastewater disposal
system.  VNP's reservations count against the Village's overall allocated
capacity, which is limited, and the Village cannot reassign the reserved
capacity as long as VNP is holding it.  The Village also must be prepared
to provide the reserved capacity to VNP upon demand.  Finally, in a world
in which demand for the Village's wastewater-disposal capacity outstrips its supply,
the opportunity cost of one developer's cost-free, unused reservation would be
close to the actual cost an alternate user would pay to actually use the
capacity.  Under these circumstances, and given the deference we afford to
rate-setting bodies, we cannot say that charging the same rate for reservations
as actual use is inequitable.
¶ 46.        
The 30% surcharge imposed on large users presents a closer question.[11]   Our resolution of this
claim, however, turns on our standard of review and the burden of proof. The
burden is not on the Village to justify its rates, including the 30%
surcharge.  It is on VNP to demonstrate, through evidence, that the rates
are unreasonable.  VNP presented no evidence to meet its burden; it simply
asserts that this fee is "clearly unrelated to operational costs."  We
found similar arguments insufficient in Robes and in Handy, and
we reach the same conclusion here.  See Robes, 161 Vt. at 196, 636 A.2d  at 348 (concluding as matter of law that plaintiffs failed to prove that
sewage fee set by select board was unreasonable where plaintiffs alleged only
that town had not conducted studies to determine necessity or cost of
additional sewage capacity, but plaintiffs presented no studies of their own showing
that additional capacity was not necessary or that costs were unreasonable); Handy,
156 Vt. at 405, 598 A.2d  at 118-19 (concluding plaintiffs failed to meet burden
of proving that sewer fee was unreasonable when they presented no cost analyses
or other evidence showing that fee was inappropriate); see also South Shell
Inv. v. Town of Wrightsville Beach, 703 F. Supp. 1192, 1203 (E.D.N.C. 1988)
(rejecting as conclusory plaintiffs' argument that fees imposed by town must be
irrational because town did not conduct cost analysis to justify them, and
concluding that where plaintiffs failed to come forward with a cost analysis or
other evidence concerning appropriateness of fees, they failed to demonstrate
that fee was arbitrary).  Without any evidence to demonstrate that the
surcharge is inequitable, VNP's arguments "are conclusory only, and hence
meritless."  Robes, 161 Vt. at 196, 636 A.2d  at 349.[12]  
¶ 47.        
We note that the trial court found that the fee structure was designed,
in part, to discourage residents and developers from holding unused capacity
unnecessarily and unreasonably.  See Gen. Textile Printing &
Processing Corp. v. City of Rocky Mount, 908 F. Supp. 1295, 1310 (E.D.N.C.
1995) (holding that municipality could lawfully impose higher rate for
high-volume sewer users to provide incentive for such users to minimize their
water and sewer needs, and recognizing that "[a] governmental body certainly
may endeavor to encourage desired behavior on the part of its citizens"); Elmwood-Utica
Houses, Inc. v. Buffalo Sewer Auth., 482 N.E.2d 549, 552 (N.Y. 1985)
(observing that Legislature had conferred virtually unfettered power upon the
local sewer authority to establish sewer rents, and under these circumstances,
it was clear that Legislature intended that sewer authority "would fix sewer
rents that, in its judgment, would best serve its economic and public policy
goals, including economic differentiations among its charges so long as there
is not involved any of the invidious discrimination condemned by statute or
Constitution, or some utterly arbitrary discrimination not related to economic
considerations or some accepted public goal" (quotation omitted)).  
¶ 48.        
Given the impact of its shrinking capacity on the population it serves,
the Village's desire to discourage hoarding of finite capacity is not an
unlawful consideration.  The trial court also found that the fee structure
for allocated, but as yet unused, water and sewer connections was applied in a
uniform and nondiscriminatory manner and was structured fairly and reasonably
to manage the allocation and use of water and sewer services in the
Village.  This was not a rate structure that applied only to VNP, or that
applied differently to VNP from any other potential users holding reserved
allocations.  VNP fails to show that the Village's rates for wastewater
allocations are inequitable.  
2.
¶ 49.        
We turn next to the water rates.  VNP argues that 24 V.S.A.
§ 3306 allows the Village to charge only for the cost of water service
based on actual usage.  It asserts that the "rationale of charging 100% of
the rate for actual usage again fails to account for the cost of actually
delivering flow."  We conclude that VNP has failed to meet its burden of
showing that the actual rates imposed are arbitrary.  
¶ 50.        
The statute regulating water rates provides as follows:
 
Such municipal corporation may establish rates by meter service or annual rents
to be charged and paid at such times, and in such manner as such municipal
corporation shall determine for the supply of water to the inhabitants of such
municipal corporation and others. From time to time, it may alter, modify,
increase, or diminish such rates and extend them to any description of property
or use as such municipal corporation may deem proper.
 
Id. § 3311.  The
statute affords a water utility broad discretion to rely on meter service or,
alternatively, annual rents in setting its rates, and authorizes the utility to
extend its rates "to any description of property or use as such municipal
corporation may deem proper."  Id.  In short, the statute
affords municipal waterworks broad authority to determine what kinds of uses
they will charge (such as, for example, reserved allocations), and whether they
will charge based on annual fees or meter service.  We will accordingly
uphold municipal water rates or rents unless arbitrary or capricious.  As
with wastewater rates, water rates are entitled to a presumption of
reasonableness, and we will defer to the municipal corporation as long as the
rates are nondiscriminatory, and are not arbitrary and capricious.  Cf. Handy,
156 Vt. at 404, 598 A.2d  at 118 (wastewater rates must be "fair, equitable and
reasonable").  
¶ 51.        
Again, VNP failed to come forward with any evidence showing that the
rates imposed are unreasonable.  Instead, it focused on its legal argument
that charges for reserved water capacity are unreasonable if they are not based
on actual cost.  The statute does not require the Village to base its fees
on actual use or the associated marginal costs.  The Village has a finite
water supply, and it has deemed it proper to charge fees for water reservations
to discourage speculators and to discourage individuals from holding on to such
reservations unnecessarily and unreasonably.  It applied its fees
uniformly and in a nondiscriminatory manner.  
¶ 52.        
VNP's legal arguments do not overcome the presumption of reasonableness
in this case, and it has presented no evidence that, for example, the shortage
issues that support the Village's wastewater reservation fee structure do not
apply in the context of water.  VNP presented no evidence and makes no
argument as to the 30% surcharge on water reservations.  Even if we were
to consider such an argument, it fails for the same reason as the challenge to
the sewer surcharge discussed above.  
C.
¶ 53.        
Given our conclusion that the charges here are lawful, we next consider whether
the Village can revoke for nonpayment.  VNP argues that there is no
statute that authorizes the Village to permanently revoke reserved allocations
for nonpayment.  According to VNP, the Village claimed to be acting under
the authority of the "disconnect" provisions of 24 V.S.A. §§ 5141-5151but
those provisions apply only to connected water and sewer services. 
Assuming arguendo that this statute does apply, VNP contends that it does not
authorize any permanent revocation and it in fact requires resumption of
service upon payment.[13] 

¶ 54.        
 We find this argument without merit.  While the Village may
have modeled its notice on the disconnection statutes, it did not purport to
act under the authority of these statutes.  A necessary corollary to the
power to set rates is the power to take some action to enforce the rates. 
See, e.g., 24 V.S.A. § 3311 (municipal waterworks may make orders and
provision concerning supply and stoppage of water necessary to enforce rates or
rents).  We conclude that the Village's authority to charge for unused
reserved allocations impliedly includes the authority to revoke those
allocations upon nonpayment.  See Gade v. Chittenden Solid Waste Dist.,
2009 VT 107, ¶ 13, 187 Vt. 7, 989 A.2d 491 ("The powers of a municipal
corporation include both those powers granted in express words by statute and
those powers necessarily or fairly implied in the powers expressly
granted.").  The right to condition a reservation on payment of fees necessarily
implies the right to enforce the fees by revoking the reservation for
nonpayment.  
¶ 55.        
For the above reasons, we affirm the trial court's judgment for the
Village and denial of VNP's various claims for declaratory and injunctive
relief.  
Affirmed.
 
 
FOR THE COURT:
 
 
 
 
 
 
 
 
 
 
 
Associate
  Justice
 

[1] 
The 1993 wastewater ordinance and 1993 joint water ordinance remained in effect
until December 6, 2008, when they were repealed.  
 
[2] 
The 1993 wastewater ordinance defined a "connection fee" as "a fee imposed upon
persons desiring to connect to the Village sewers, which fee shall be as
determined by the Board in accordance with the provisions of [24 V.S.A.
§ 3615], and which fee shall include, but not be limited to, Village's
cost of performing, supplying materials, supervising, inspecting and administering
a connection to the sewage system, including any necessary sewer service
extension and upgrading of sewers."  The 1993 water ordinance defined
"connection fee" as "a fee imposed on applicants for the right to connect to
the public water system, which fee shall include the company's cost of
performing, supplying materials, supervision, inspecting and administering a
connection to the public water system, including any necessary water service
extension or upgrade of lines."  
[3]
 In July 2005, VNP also asked the state for permission to construct all of
the remaining buildings in its project.  In August 2005, the state issued
a permit to VNP, indicating that the proposed project amended an earlier permit
to construct five remaining buildings.  It stated that the project was
approved for a maximum of 9000 gpd of sewage.  
 
[4] 
The trial court stated that the fees charged to VNP were based on a rate
structure that resulted in unused allocated capacity being billed at a higher
rate than that charged for actual use of allocated capacity.  The Village
challenges this finding as erroneous and inconsistent with the stipulated
facts, cited above, which the court adopted.  We agree.  The parties'
stipulation reflects that the 30% surcharge applies to large actual
users and large reservations alike.
 
[5] 
On appeal, VNP does not challenge the Village's authority to charge reservation
fees to "new permit holders."  
[6]
 Citing Handy v. City of Rutland, 156 Vt. 397, 403-04, 598 A.2d 114, 117-19 (1990), the Village argued that judicial review is available only
with respect to the reasonableness of extraterritorial municipal rates. 
The court rejected the Village's argument that the court had no authority to
review the reasonableness of its rates within the municipality.  
 
[7] 
The trial court addressed several other arguments, including a due process
claim pursuant to 42 U.S.C. § 1983, that have not been raised on appeal.
[8]
 The statute providing for election or appointment of water commissioners
separate from the municipal legislative board was not enacted until 1993. 
See 1993, No. 91, § 1.
 
We note that there are two chapters in Title 24 that
address sewage, Chapter 97 entitled "Sewage System," and Chapter 101 entitled
"Sewage Disposal System."  Chapter 97 provides that, unless a municipality
votes otherwise, the trustees of a village act as "a board of sewage
commissioners" with the power to supervise the municipal sewage system and
"make and establish all needed rates for rent, with rules and regulations for
its control and operation."  24 V.S.A. §§ 3506, 3507.  Chapter
97 adopts certain provisions found in Chapter 101, including the provision on
sewer rates set forth at 24 V.S.A. § 3615.  Id.
§ 3508.  In a similar vein, Chapter 101 provides for the creation of
a "board of sewage disposal commissioners," which in this case is also the
village trustees.  Id. § 3614.  This board is charged
with establishing "sewer disposal charges" pursuant to § 3615.  The
distinction, if any, between these two chapters is not evident, and it is not
clear why the law includes two separate provisions for the creation of boards,
both providing for rate-setting pursuant to the same statute.  In any
event, we discern no meaningful difference between the boards' relevant
responsibilities as described in the respective statutes.  
[9]
 For this same reason, we reject VNP's argument that laches bars the
Village from charging VNP for reservations.  The Village has not sought
belated payment for reservations retroactive to 1994; it sought to charge VNP
prospectively beginning in 2006 pursuant to its statutory authority to change
rates.  
[10] 
VNP also raises a cursory challenge to the rate structure used by the Village
since 2008.  It asserts that "[c]harging incremental percentages of actual
flow rates depending on the amount of capacity remaining in the system is also
transparently unrelated to costs."  This argument is inadequately briefed,
and it is also plainly insufficient to demonstrate, in the face of a
presumption of reasonableness, that the new rates are inequitable.  
[11]
 The trial court did not separately discuss the surcharge; given its
reasoning, and especially its concern about discouraging speculation, we infer
that its conclusion that the rates charged by the Village were fair and
reasonable took into account not only the 100% reservation fee, but also the
large user surcharge.
 
[12]
 On appeal, VNP merely argues, "Nor was any rational justification offered
at trial for adding a 30% large user surcharge to an unconnected holder of a
wastewater allocation."
[13] 
In its brief, VNP notes that the Village threatened to revoke its allocations
because the Village considered VNP's payment "under protest" to be an
anticipatory breach of the agreement by which VNP held what the Village deemed
to be a provisional allocation.  VNP sought injunctive relief, whereupon
the Village withdrew its threat.  As VNP concedes, its motion for
injunctive relief consequently became moot.  We consider its arguments
concerning this threat to be moot as well.  See In re Moriarty, 156
Vt. 160, 163, 588 A.2d 1063, 1064 (1991) ("A case is moot if the reviewing
court can no longer grant effective relief." (quotation omitted)).