RE: Stowe Club Highlands (formerly Robinson Springs Partnership), Application #5L0822-12-EB, Findings of Fact, Conclusions of Law, and Order (June 20, 1995) VERMONT ENVIRONMENTAL BOARD 10 V.S.A. Chapter 151 Re: Stowe Club Highlands (formerly Robinson Springs Partnership) Application #5L0822-12-EB FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER This decision, dated June 20, 1995, pertains to an appeal of the District #5 Environmental Commission's partial denial of land use permit application #5L0822-12 (Application) for a project proposed by Stowe Club Highlands, formerly known as Robinson Springs Partnership (Appellant). The Application is for a permit (Permit) authorizing the development of four residential lots in the development known as Stowe Club: lots numbered 34, 36, 37, and the "Meadow Lot" (Meadow Lot). The Permit authorized the development of lots 34, 36, and 37, but the findings denied a permit for the development of the Meadow Lot under the doctrine of collateral estoppel and criteria 8 and 9(B). In brief, the Application proposed the removal of an old barn (Barn) on the Meadow Lot and the construction of a single family residence in the Barn's footprint (the Project). As explained below, the Board denies the Application for the development of the Meadow Lot under the doctrine of collateral estoppel. I. BACKGROUND On September 1, 1994, the District Commission denied the Application to develop the Meadow Lot. On September 12, 1994, the Appellant filed an appeal with the Environmental Board. On October 17, 1994, Board Chair Art Gibb convened a prehearing conference in Pittsford, Vermont. On October 21, 1994, the Chair issued a Prehearing Conference Report and Order (the Report). On December 15, 1994 and March 13, 1995, the Board issued Memoranda relative to the preliminary issues of party status, the submission of additional evidence and the closing of the evidence. On March 15, 1995, the Board convened a hearing in this matter with the following parties participating: Appellant by Harold B. Stevens, Esq. Leighton Detora, Esq., pro se At the hearing Party Detora made an oral Motion to Dismiss claiming that the Appellant's Notice of Apeal was insufficient. After hearing testimony and taking a site visit, the Board recessed the matter. The Board deliberated on this matter on March 15 and June 1, 1995. On June 1, 1995, the Board declared the record complete and adjourned the hearing. This matter is now ready for decision. To the extent any proposed findings of fact and conclusions of law are included below, they are granted; otherwise, they are denied. II. ISSUE Whether the Project is barred by the application of the doctrine of collateral estoppel and, if not, whether, pursuant to 10 V.S.A. Sec. 6086(a)(8) and (9)(B), the Project will have an undue adverse effect on the scenic or natural beauty of the area, aesthetics, historic sites or rare and irreplaceable natural areas or primary agricultural soils. III. FINDINGS OF FACT 1. In 1985, a Vermont partnership named Stowe Club Associates (the Original Permittee) owned an approximately 240 acre tract of land (the Project Tract) off Sinclair Road in Stowe, Vermont. 2. On August 12, 1985, the Original Permittee filed an application for an Act 250 permit with the District #5 Environmental Commission (District Commission), requesting authorization to develop and subdivide the Project Tract. 3. On November 8, 1985, the District Commission issued Land Use Permit #5L0822/5L0822(Revised) with associated Findings of Fact, Conclusions of Law and Order (the Original Permit) to the Original Permittee. The Original Permit authorized the Original Permittee to construct a 100-unit hotel with restaurants and sports facilities, a 10,000 square foot conference center, 55 three-bedroom townhouses/duplexes and a 23-lot subdivision on the Project Tract. 4. Condition 2 of the Original Permit states: By acceptance of the conditions of this permit without appeal, the permittee confirms and agrees for [it]self, and all assigns and successors in interest that the conditions of this permit shall run with the land and the land uses herein permitted . . . 5. Condition 13 of the Original Permit states: The 40 acre meadow on the project tract shall be retained for agricultural uses for a period of time at least equal to the life of this land use permit. 6. Under Criterion 8 of the Findings for the Original Permit, the District Commission found, in part: The site contains meadow and forest areas which vary from gentle to steep slopes. As noted under Criterion 9(B), the large 40 acre meadow area at the peak of the project shall be preserved as open land. 7. Under Criterion 9(B) of the Findings for the Original Permit, the District Commission found, in part: The 240 acre tract contains 185 acres of primary agricultural soils identified as Adams, Marlow, Salmon and others. The project will develop a total of 53 acres of the site, of which 39 acres are primary soils. In this analysis, some 21% of the primary soils will have their potential reduced through actual construction of improvements. . . [The application] depicts areas of development and demonstrates that a majority of the site will remain undeveloped and undisturbed. . . Additionally, the 40+ acre meadow at the top of the project site will remain open and be designated for agricultural uses based upon the applicant's Exhibit[s] 18 and 69 - - Applicant and an agreement with an adjoining farmer (Exhibit 1 - - Parties). These agricultural uses shall be ensured for a period of time at least equivalent to the life of any land use permit for this project. 8. Under Criterion 8, the application for the Original Permit states: The remainder of the project lands outside of the Green Area Module vary from open meadow to forested and from gently sloping terrain to steep slopes. The large meadow of approximately 40 acres at the peak of the project will be completely maintained in its natural state for agricultural purposes. 9. Under Criterion 9(B), the application for the Original Permit states: Only a 40 acre meadow is currently in production, and it is used only for hay. This parcel is located near the highest elevations of the site, and will be entirely retained in its natural state No construction or development will occur. 10. Under Criterion 9(B) the application for the Original Permit states: All development of the site and all proposed structures have been planned to maximize clustering in order to assure that the substantial majority of the site remains open. 11. The Meadow Lot was the subject of a purchase and sales agreement between the Original Permittee and the adjoining farmer, Paul Percy (Percy Agreement), at the time that the Original Permit was issued. The Percy Agreement prohibited development of the Meadow Lot. The District Commission admitted the Percy Agreement into evidence as an exhibit in the proceedings on the application for the Original Permit. The sale of the Meadow Lot to Percy did not occur. 12. Condition 13 of the Original Permit was issued pursuant to the related Findings and exhibits submitted under Criteria 8 and 9(B). 13. Other than the Percy Agreement, Condition 13 in the Original Permit, zoning restrictions, and an agricultural easement legend on a boundary plan, there are no other express private agreements, covenants, conditions, restrictions or easements of record relative to the Meadow Lot remaining open and available for agriculture. 14. The Meadow Lot was subsequently determined to contain 22 acres; not the 40 acres originally described in the Original Permit. 15. A 1986 amendment to the Original Permit allowed construction of community waste disposal fields in the Meadow Lot. 16. In May of 1990, the Original Permittee, experiencing financial difficulties, conveyed the project tract to the Chittenden Bank in lieu of foreclosure. 17. Between May 1990 and April 1992, the Chittenden Bank sold numerous single family house lots around the perimeter of the Meadow Lot. The lot known as Lot 16 (Lot 16) was sold to Party Detora on April 19, 1991. Detora purchased Lot 16 in reliance on the fact that the Meadow Lot would remain undeveloped, and that Original Permit condition 13 and the associated Findings, plus the local zoning ordinance prohibited development. In addition, Detora's purchase of Lot 16 was motivated by the unobstructed view, Lot 16's location at the end of the Project Tract, and the representations that the Meadow Lot would remain open and in agricultural use. 18. Following his purchase of Lot 16, Detora constructed his residence on the lot. Detora has enjoyed the agricultural atmosphere of the neighborhood, the cows in the nearby pasture, and the lack of light at night from the barn. 19. In April 1992, Robinson Springs Partnership purchased the remaining portion of the project tract. 20. Prior to accepting title to the Project Tract, Robinson Springs Partnership knew of the land use restrictions in the Original Permit. 21. The Appellant, Stowe Club Highlands, is the direct successor in interest of Robinson Springs Partnership. 22. The 100-unit hotel authorized in the Original Permit was subsequently downsized to a 21-unit hotel or inn. 23. The traditional Vermont Land Use pattern is that of a working agricultural landscape. IV. CONCLUSIONS OF LAW Collateral estoppel is a doctrine which is intended to eliminate repetitive litigation, and give repose to litigants. Applying collateral estoppel prevents a party from relitigating those issues necessarily and essentially determined in a prior action. Berisha v. Hardy, 144 Vt. 136, 138 (1984). Although collateral estoppel does not apply to administrative proceedings as an inflexible rule of law, the principles of collateral estoppel generally apply in Act 250 proceedings. See In re Application of Carrier, 155 Vt. 152, 157 (1990). The Board has applied collateral estoppel in previous cases. See, e.g., Re: Cabot Creamery Cooperative, Inc., #5W0870-13-EB, Memorandum of Decision (Dec. 23, 1992). A. Elements of Collateral Estoppel In Cabot Creamery, the Board applied the elements of collateral estoppel as enunciated by the Vermont Supreme Court in Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265 (1990). Those elements, and our decision regarding their applicability to the present case, are as follows: 1. Collateral estoppel must be asserted against one who was a party or in privity with a party in the earlier action. The Appellant's predecessor in interest applied for and was issued the Original Permit. The Appellant took title to the Project Tract knowing that the Original Permit restricted the land use on the Meadow Lot. The Appellant now has filed its Application to amend the Original Permit and develop the Meadow Lot. Therefore, the Appellant is in privity with the Original Permittee and the first element is met. 2. The issue was resolved by a final judgment on the merits. The District Commission issued the Original Permit and Findings, which were incorporated therein. Condition #13 was made part of the Original Permit pursuant to the District Commission's decisions under Criteria 8 and 9(B). The condition was not appealed. Thus, there was a final judgment on the merits on whether the Appellant should be required to set aside the Meadow Lot for reasons related to both aesthetics and preservation of primary agricultural soils. The second element is met. 3. The issue is the same as raised in a later action. The Original Permit authorized the creation of the residential lots and the Meadow Lot. The District Commission made affirmative findings under Criteria 8 and 9(B) based upon its understanding of what purposes would be served by the restriction on the use of the Meadow Lot. In 1985, relative to Criterion 8, the District Commission concluded that "[a]s noted under Criterion 9(B), the large 40-acre meadow area at the peak of the project shall be preserved as open land." In 1985, relative to Criterion 9(B), the District Commission concluded that as part of the Original Permittee's mitigation of the effects of the development on the Project Tract's primary agricultural soils, the Meadow Lot "will remain open and designated for agricultural purposes." Thus, we conclude that the District Commission's affirmative finding under Criterion 8 relied upon the Original Permittee's representations which were set forth in the context of its Criterion 9(B) discussion, and which was made part of the Original Permit as Condition 13 pursuant to both Criterion 8 and Criterion 9(B). Now, the Appellant seeks to develop the same Meadow Lot which was to be kept as "open and designated for agricultural uses." Thus, the issue in this appeal is whether the Meadow Lot must remain open and for agricultural use for aesthetic reasons under Criterion 8. In issuing the Original Permit and in denying the recent Application, the District Commission decided that the Meadow Lot must remain open for aesthetic reasons. Accordingly, the issue in this proceeding is the same as that which was decided in 1985 and, therefore, the third element is met. 4. There was a full and fair opportunity to litigate the issue in the earlier action. The burden of proof on this element of collateral estoppel is on the Appellant. Trepanier, supra, 155 Vt. at 266. We are not persuaded that the Appellant did not have a full and fair opportunity to litigate whether Condition 13 was necessary for the District Commission to make an affirmative finding under Criterion 8. The Appellant's predecessor in interest participated before the District Commission and was represented by counsel. The Original Permittee read the Original Permit, accepted it, and did not appeal it to the Board within 30 days under 10 V.S.A. Sec. 6089(a). In summary, we conclude that there was a full and fair opportunity to litigate the issue of Criteria 8 and 9(B) in the 1985 proceeding. Therefore, the fourth element is met. 5. Applying collateral estoppel in the subsequent action must be fair. The burden of proof under this element of collateral estoppel is also on the Appellant. Id. The Appellant purchased and accepted title to the Project knowing that a Land Use Permit existed, which regulated the use of the property. Condition 13 of the Original Permit is clear on its face and, from a thorough reading of that permit and the Findings of Fact incorporated therein, the Appellant would have known that the Meadow Lot's development and use were restricted. The Appellant could reasonably expect that the restrictions might not be eliminated in a further proceeding. Therefore, applying collateral estoppel would not be unfair to the Appellant. The fifth element is met. In summary, we conclude that the elements of collateral estoppel are met in this case. However, since collateral estoppel does not apply to administrative proceedings as an inflexible rule of law, we have the discretion not to apply this doctrine because of policy or practical considerations. B. Policy and Practical Considerations In Cabot Creamery, the Board identified two sets of policy considerations: finality and flexibility. In addition, the Board identified certain factual circumstances which it considered as being relevant to its balancing of the competing policies. Cabot Creamery at 11. We will apply the balancing test adopted by the Board in Cabot Creamery in this case. i. Flexibility. There may be times when an Act 250 permit condition should be modified because a condition contained in the decision may no longer be the most cost-effective or best way to meet the goal of mitigating impacts. Cabot Creamery at 10. Where a change has occurred, collateral estoppel should not be applied as an inflexible rule of law. However, such changes which justify the deletion of a permit condition may consist only of (a) changes in factual or regulatory circumstances beyond the control of a permittee; (b) changes in the construction or operation of the permittee's project, not reasonably foreseeable at the time the permit was issued; or (c) changes in technology. In addition, the permittee that seeks to avoid compliance with a permit condition by means of a permit amendment must prove to the Board that the permit amendment application is a direct outgrowth of the above-referenced changes. Cabot Creamery at 11. In the present case, the Appellant has not persuaded us that factual or regulatory circumstances have changed. The overall nature of the development remains the same as a residential development with a hotel. Mr. Percy continues to farm the property adjoining the Meadow Lot. The neighborhood remains rural residential. Furthermore, we are not persuaded that the changes in the construction and operation of the overall development were not reasonably foreseeable at the time that the Original Permit was issued. It was foreseeable that the development might have to be down-sized and that waste disposal fields might have to be relocated. Likewise, it was foreseeable that the sale of the Meadow Lot might not occur. Regardless of the changes to the overall development, we are not persuaded that these changes have a direct connection to preserving the Meadow Lot as open space and for agricultural use. Finally, the Appellant does not argue that changes in technology have occurred. ii. Finality. In contrast to the policy of flexibility is the policy of finality. There is significant value in finality of Act 250 decisions so that all parties have some assurance that decisions will not be relitigated, and so that parties may rely on representations that applicants make concerning proposals to mitigate environmental and public health impacts. Cabot Creamery at 10. The district commissions also rely on these representations in rendering their decisions. In those cases where a permit is issued, very often the applicant's representations are the basis for permit conditions. The purpose of permit conditions is to alleviate adverse effects that would otherwise be caused by the project. Those adverse effects would require a conclusion that a project does not comply with the criterion at issue unless the condition is followed. If conditions to mitigate impacts can simply be ignored and not complied with, and instead re litigated at a future date, the protection of the public and the environment from the impacts those conditions are designed to remedy is less likely to occur. In such a circumstance, the Act 250 decision-making process will become less one of making decisions which are adhered to, and more one of picking the time and composition of Act 250 tribunal most favorable to one's interest. Cabot Creamery at 11. In the present case, the Original Permittee represented that the Meadow Lot would remain open, undeveloped, and be dedicated to agricultural use. The District Commission incorporated that representation into a permit condition. Residential lots were sold adjacent to the Meadow Lot in reliance on that condition. In essence, people chose to live in that neighborhood because of the permit condition, so as to enjoy the aesthetics and agricultural activities of a rural residential community. To remove the restrictive condition would undermine the reliance those lot owners have in the protection afforded by Land Use Permits. Furthermore, Condition 13 of the Original Permit was one aspect of a mitigation plan for the overall development. Condition 13 mitigated the aesthetic impact of the development on this rural community. In addition, Condition 13 was part of a comprehensive plan not to destroy the agricultural use of the Project Tract. Therefore, we conclude that the policy consideration of finality favors the application of collateral estoppel in the present case. iii. Balancing of competing policies. We conclude that in the present case, the policy of finality outweighs the policy of flexibility. Therefore, we conclude that the doctrine of collateral estoppel is applicable and order that the Application to develop the Meadow Lot be denied. Accordingly, we do not reach the issue of whether the Project complies with Criteria 8 and 9(B). Likewise, the Board will not address Party Detora's March 15, 1995, Motion to Dismiss, claiming that the Appellant's Notice of Appeal was insufficient. V. ORDER The Application to develop the Meadow Lot is denied because it is barred by the doctrine of collateral estoppel. Jurisdiction is returned to the District #5 Environmental Commission. Dated at Montpelier, Vermont, this 20th day of June, 1995. ENVIRONMENTAL BOARD s/s John T. Ewing ________________________ John T. Ewing, Chair John M. Farmer Arthur Gibb Marcy Harding Samuel Lloyd William Martinez Rebecca M. Nawrath Robert Page Steve E. Wright a:\5L0822-1.dec (CM1) c:\wp51\decision\5l0822-1.dec (v)