Monday, February 15, 2016

Prospective Permitting Puzzle

In re Treetop Development Co., 2016 VT 20

By Andrew Delaney

I am never buying a condo. Maybe they're great—I don't know. What I do know is that it seems like we have three primary case areas in Vermont: bail appeals, probation conditions, and condo disputes.

As the SCOV puts it, “This appeal is the latest chapter in an ongoing dispute between Treetop at Stratton Condominium Association” (Association) and four Stratton-affiliated companies (Stratton) over a stormwater-management system.

So, over a decade ago, the District 2 Environmental Commission issued an Act 250 permit to Stratton to build 25 three-unit townhouses, with necessary infrastructure, including a stormwater-management system. 

One of the Stratton-affiliated companies did the construction and all seventy-five units were sold. Each owner got a percentage piece of the common areas, including the stormwater-management areas, which were administered and managed by the Association.

The stormwater-management system didn’t work all that great, as you may’ve guessed from all that foreshadowing. So the Association sued Stratton. Ultimately, the parties settled—and the settlement required Stratton to get corrective permits and fix the stormwater problems. So, Stratton filed an application to amend its Act 250 permit to fix the problems.

The Commission was like, “Well, it’s not ideal, but it’s what we’ve got,” and issued a conditional permit. The Commission expressed concern that things hadn’t been done right in the first place, but issued the permit anyway because things needed to be fixed. The Commission noted that it would add protections to the permit to ensure compliance and that it would “retain jurisdiction over these matters.”

Both Stratton and the Association moved to alter or amend. The Commission made some minor changes and issued a memorandum of decision on the amended permit including several conditions. One condition was that Stratton repair the stormwater-retention pond and provide weekly reports. The permit also provided—and the SCOV underlined this, so I think it’s important—that the Commission reserved rights including “to evaluate and impose additional conditions as needed.” Neither party appealed the amended permit.

Pursuant to the we-can-review-when-we-wanna provision, the Commission reconvened a few months later and looked things over. It declined to impose additional conditions, noting that there were a couple pending enforcement actions, so oversight wasn’t really an issue for compliance with the amended permit terms. The Commission also noted that nobody appealed the amended permit.

The Association appealed the leaving-it-alone decision to the Environmental Division. Stratton moved to dismiss. The Environmental Division dismissed, reasoning that the Association couldn’t use the impose-additional-conditions-as-needed provision as a private-enforcement clause. The Environmental Division also noted that the Commission didn’t have the authority to ensure compliance—that duty falls to the Natural Resources Board. So, essentially, the Environmental Division found that the evaluate-and-impose provision was beyond the Commission’s authority.

There’s a bit more wrangling—the Association argued that the Environmental Division acted outside its authority by reasoning that the evaluate-and-impose provision was outside the Commission’s authority. The Environmental Division responds with, more or less, “Hey—y’all chose not to appeal; it’s not our fault.”

And the Association appeals. The SCOV notes that when it reviews statutory interpretation and issues of law, it does so de novo.

The Association argues that the evaluate-and-impose-additional-conditions provision in the amended permit is valid and enforceable, and that it allows the Commission to step in and make sure things get done. The Association also says that the condition is the reason it didn’t appeal the amended permit in the first place—essentially an if-we’d-known-this-was-gonna-happen-we-woulda-challenged-it argument. Stratton responds that the condition as the Association views it “amounts to a key that can be used to re-open the door to amend the permit at any time and impose additional conditions, preventing finality.” Stratton and the NRB both argue that the condition is an unenforceable condition subsequent and that the Association’s appeal is a collateral attack on the unappealed amended permit.

The SCOV notes the district commissions’ functions under Act 250. “[I]t falls to the nine District Environmental Commissions to consider Act 250 permit applications and amendments in the context of the ten statutory criteria.” The commissions have to make affirmative findings under all ten statutory criteria before issuing a permit. If a permit is to be amended, it must be within the statutory framework. Appeals must be taken within thirty days of the issuance of a permit.

Permits may be issued with conditions. The SCOV notes that conditions can cover a fair amount of ground, including where, why, what, and how conditions. But, and this is a big but, enforcement of a permit falls to the NRB and the Agency of Natural Resources.

What that means for this case is that the Commission exceeded its authority. It can’t just keep going back and fixing things. If there’s noncompliance, then the NRB is supposed to step in and enforce the permit or ask for its revocation. The Commission’s role is to evaluate the statutory criteria and the application, not to provide ongoing amendment to a permit. Simply put, the SCOV says that once the permit is issued, the Commission’s job is more or less done. The SCOV holds: “Such an open-ended condition, effectively endowing the Commission with the prospective extra-statutory authority to re-open the amended permit and perpetually act, is an invalid condition subsequent.”

The SCOV touches on the not-appealed-so-that-makes-it-binding argument by noting that in general, terms exceeding authority are allowed if not appealed. But here the SCOV reasons that the condition: “seeks to prospectively expand the Commission’s authority to include enforcement, allowing it to circumvent the procedure for permit amendments and to continuously reconsider the Treetop Project’s compliance with the Act 250 criteria.” This is not something the SCOV is willing to allow.

As far as the Association’s reliance-on-the-condition-so-we-didn’t-appeal pitch, the SCOV is not particularly sympathetic. The SCOV reasons that if the permit was deficient in other respects, then the Association should’ve appealed, not have relied on the evaluate-and-impose-additional-conditions provision in lieu of appropriate permit conditions. Finally, the SCOV notes that the Association can still get the NRB involved with enforcement. The SCOV affirms the Environmental Division’s dismissal.

What do you think? 

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