Title: In re Lyon

State: vermont

Issuer: Vermont Supreme Court

Document:

In re Lyon (2004-231); 178 Vt. 232; 882 A.2d 1143

2005 VT 63

[Filed 24-Jun-2005]

       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.

                                 2005 VT 63

                                No. 2004-231

  In re William and Ann Lyon	                 Supreme Court

                                                 On Appeal from
                                                 Water Resources Board

                                                 February Term, 2005

  John F. Nicholls, Chair

  John W. Lyon of Otterman and Allen, P.C., Barre, for Appellants.

  David John Mullett of David John Mullett, P.C., Montpelier, for Appellee.

  William H. Sorrell, Attorney General, and S. Mark Sciarrotta, Assistant
    Attorney General, and  Abigail Doolittle, Law Clerk (On the Brief),
    Montpelier, for Amicus Curiae State of Vermont.

  PRESENT:  Reiber, C.J., Dooley, (FN1) Johnson and Skoglund, JJ., and 
            Allen, C.J. (Ret.), Specially Assigned
               
        
       ¶  1.  SKOGLUND, J.   Appellants William and Ann Lyon appeal the
  revocation of wastewater permit issued by the Agency of Natural Resources. 
  The Lyons owned three separate adjacent parcels of land in Northfield,
  Vermont: a parcel with a single family house; a small lot that was a
  pre-existing lot as defined by the Wastewater System and Potable Water
  Supply Rules and therefore exempt from permitting (the pre-existing lot);
  and another small lot arguably eligible for the same pre-existing lot
  status, though the deed did not contain the pre-existing deferral language
  (the deferral lot).  To provide a seasonal home for Mr. Lyon's mother, the
  Lyons moved a camper/trailer onto the property line straddling the
  pre-existing lot and the deferral lot and obtained a wastewater permit from
  the Agency of Natural Resources (ANR) to connect the camper/trailer to an
  existing municipal sewage line.  A neighbor complained and petitioned ANR
  to revoke the permit.  Following a hearing, the Commissioner of ANR
  declared the permit invalid because the Lyons' application did not include
  the design and installation certifications necessary to receive a valid
  permit.  The Lyons appealed the Commissioner's decision to the Water
  Resources Board.

       ¶  2.  The Water Resources Board revoked the wastewater permit issued
  to the Lyons by ANR, holding that the Lyons' application did not include
  the statutorily required certifications.  Given the extraordinary
  circumstances of this case, including an acknowledged, systemic failure on
  the part of multiple ANR regional offices to require the certifications
  when issuing wastewater permits, we hold that the Board erred in rejecting
  the Lyons' estoppel argument and that the State is estopped from revoking
  the Lyons' wastewater permit.  Accordingly, we reverse the Board's decision
  revoking the permit and remand to ANR to reinstate the permit.  Statutory
  and Regulatory Background
   
       ¶  3.  First, we summarize the regulatory backdrop against which
  this case unfolds.  The Vermont Legislature established the Potable Water
  Supply and Wastewater System Permit program for the purpose of 
  "regulat[ing] the construction, replacement, modification, and operation of
  potable water supplies and wastewater systems in the state in order to
  protect human health and the environment, including potable water supplies,
  surface water and groundwater."  10 V.S.A. § 1971(1).  ANR may not grant
  wastewater permits unless the applicant provides a system design
  certification, id. § 1973(d), and, upon completion of the system, the
  permit remains valid only if the permitee submits an installation
  certification, id. § 1973(e).  There is no provision for waiver of the
  certifications in the statute.

       ¶  4.  The permit program delegates authority to ANR to establish
  regulations on wastewater system requirements and the issuance of permits. 
  Pursuant to that authority, in August 2002, ANR promulgated the Wastewater
  System and Potable Water Supply Rules, 7 Code of Vermont Rules 12 033 001
  (2002) (amended 2005), available at
  http://www.anr.state.vt.us/dec/ww/Rules/OS/Final081602/Subchap1-4-081602.pdf
  [hereinafter Wastewater Rules].  These rules condition issuance of a permit
  on the submission of a proper design certification, id. § l-302(b)(l), and
  mandate that the permit shall require submission of an installation
  certification once the project is complete, id. § 1-303(c).  The Wastewater
  Rules contain no waiver provision for design or installation
  certifications.

       ¶  5.  On the other hand, the Rules provide that "[f]or projects that
  present a negligible potential for adverse environmental impact, the
  Secretary may waive submission of any of the specific information required
  in subsections (c) (l) through (7) of this section as he or she deems
  appropriate."  Id. § l-302(c)(8).  Subsections l-302(c)(1)-(7) set forth
  specific application materials, including a plot plan, design flow, soil
  data, site plans, and other construction details, but make no mention of
  design or installation certifications.  In other words, neither the waiver
  language of § 1-302(c)(8), nor the language of § 1-302(c)(1)-(7) to which
  it refers, covers design and installation certifications or allows ANR to
  waive them.  Indeed, the Secretary cannot issue a permit "unless the
  Secretary receives the designer certification required to be submitted with
  the permit application under section 1-302(b)(l) of these Rules."  Id. §
  l-302(e).
   
       ¶  6.  Once an applicant has submitted a complete permit
  application, the Secretary has authority to deny the permit or grant it
  with specific conditions.  Id. § l-302(e).  After a permit is granted, ANR
  may revoke it "either in response to a petition or on [its] own motion." 
  Id. § l-306(a).  An applicant or any person directly affected by a
  permitted project may petition ANR for review and reconsideration.  Id. §
  1-304(a).  The bases for revocation include a violation of a permit
  condition as well as a "violation or failure to comply with the provisions
  of these Rules or authorizing statutes."  Id. § 1-306(b)(4).  Additionally,
  a "person aggrieved by a final act or decision, other than an enforcement
  decision, of the Secretary under these Rules may appeal to the Vermont
  Water Resources Board in accordance with 10 V.S.A. section 1977."  Id. §
  l-305(a).

  Factual and Procedural Background

       ¶  7.  In November 2002, the Lyons received a letter from the Barre
  Regional Office of ANR discussing a possible subdivision violation arising
  from the location of the camper/trailer.  The Regional Engineer, Donald
  Wernecke, offered three options the Lyons could take to avoid a violation:
  (1) merge the two lots on which the camper/trailer was located; (2) obtain
  a Wastewater System and Potable Water Supply Permit for the camper/trailer;
  or (3) relocate the camper/trailer. 

       ¶  8.  The Lyons chose to pursue two of the three options.  First, in
  December 2002, the Lyons applied for a wastewater permit for the project. 
  Though the application lacked both a design certification and an
  installation certification, ANR issued the permit on February 6, 2003. 
  Second, two days after receiving the permit, the Lyons executed a quitclaim
  deed merging the two lots.  
   
       ¶  9.  After the wastewater system had been installed, an adjoining
  property owner, Robert Tucker, filed a petition with ANR to revoke the
  permit.  On August 12, 2003, in response to Tucker's petition, the
  Commissioner declared the Lyons' wastewater permit invalid because it was
  issued without design and installation certifications, in violation of
  sections l-302(b) and l-303(c) of the Wastewater Rules.  Also on August 12,
  2003, the Commissioner issued a "Procedure for issuance of voluntary
  estoppel Letters for projects with permits, that are substantially
  completed, but which do not have valid installation certifications,"
  acknowledging that permits were issued between June 14, 2002 and August 18,
  2003 without submission of a plan prepared by a designer and that, lacking
  a plan, no installation certification was included in the applications. 
  Jeffrey Wennberg, Commissioner, Department of Environmental Conservation,
  Estoppel Statement (Aug. 12, 2003) [hereinafter Estoppel Statement]. 
  Therefore, the Commissioner stated, ANR would not institute enforcement
  actions for wastewater permits that lacked design and installation
  certifications because permit recipients had "reasonably relied on the
  expectation that the permit was issued in compliance with the [Wastewater
  Rules]."  Id. 

       ¶  10.  The Lyons appealed to the Board for de novo review of the
  Commissioner's decision invalidating their permit pursuant to 10 V.S.A. §
  1977.  Both Tucker and the Lyons moved for summary disposition, and ANR
  moved to dismiss. 

       ¶  11.  On April 21, 2004, the Board granted summary judgment to
  Tucker, and revoked the Lyons' permit.  It ruled that "ANR had no authority
  to waive the certification requirements" of 10 V.S.A. § 1973(d), (e) and
  sections l-302(b)(l) and l-303(c) of the Wastewater Rules.  Further, the
  Board ruled that "[b]oth the statute and ANR's rules expressly prohibit ANR
  from issuing a permit in the first place unless the permit application
  includes a design certification."  The Board also rejected the Lyons'
  estoppel argument, finding it unsupported by the facts.
   
       ¶  12.  The Lyons then appealed under 10 V.S.A § 1977(b), which
  allows an aggrieved party to appeal adverse decisions by the Water
  Resources Board to the Supreme Court.  The Lyons argue that: (1) the design
  certification is waivable and the Board's interpretation of the governing
  statute creates a rule conflict; (2) the revocation is a retroactive
  application of law that violates vested rights of the Lyons; and (3) the
  State is estopped from revoking the permit.  Appellee Tucker and the State
  of Vermont, as amicus curiae, request that the Court affirm the Board's
  decision.  

                                     I.

       ¶  13.  As a preliminary matter, we reject the Lyons' first two
  arguments.  First, as explained above, the authorizing statute and the
  applicable Wastewater Rules explicitly require both design and installation
  certifications.  There is no authority allowing ANR to waive these
  requirements.  As noted above, section 1-302(c)(8) of the Wastewater Rules
  authorizes ANR to waive only certain enumerated application materials, not
  including the certifications.  Thus, there is no rule conflict, and the
  Lyons' first argument is without merit.  

       ¶  14.  Second, the revocation of the Lyons' permit was not a
  retroactive application of law violating a vested right of the Lyons.  The
  permit was revoked pursuant to valid regulations already in effect at the
  time they applied for their permit.  Accordingly, the Lyons' second
  argument is also without merit.  Thus, the single issue remaining on appeal
  is whether the Lyons have met their burden to estop the State.  For the
  reasons set out below, we hold that the State is estopped from revoking the
  Lyons' permit, and we reverse the Board's decision revoking the permit. 

                                     II.
   
       ¶  15.  We review the Board's denial of the Lyons' estoppel argument
  to determine "whether the Board acted arbitrarily, unreasonably, or
  contrary to law."  In re Town of Sherburne, 154 Vt. 596, 604, 581 A.2d 274,
  279 (1990).  In doing so, "we must decide whether the decision makes sense
  to a reasonable person," id. at 605, 581 A.2d  at 279, while recognizing
  that "the board has wide discretion in making its findings and conclusions
  as long as they are not inconsistent with legislative and agency policy,"
  Town of Groton v. Agency of Natural Res., 172 Vt. 578, 579, 772 A.2d 1103,
  1105 (2001) (mem.).  However, an administrative board's conclusions of law
  are not so protected, and it is for this Court to determine whether, as a
  matter of law, its findings of fact fairly and reasonably support the
  conclusions of law.  In re McGrath, 138 Vt. 77, 82,