RE: Wesco, Inc. and Jacob & Harmke Verburg, Declaratory Ruling #304, Findings of Fact, Conclusions of Law, and Order (Dec. 7, 1995) VERMONT ENVIRONMENTAL BOARD 10 V.S.A. Chapter 151 RE: Wesco, Inc. and Jacob & Harmke Verburg Declaratory Ruling #304 FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER This decision pertains to a petition for declaratory ruling regarding whether the proposed construction of a gasoline and diesel service station, with convenience store and deli is subject to 10 V.S.A. Chapter 151 (Act 250). As explained below, the Environmental Board concludes that an Act 250 permit is required prior to the commencement of such construction. I. PROCEDURAL SUMMARY On February 27, 1995, the District #4 Environmental Coordinator issued Advisory Opinion #AO-95-112 (the Opinion) to Wesco, Inc. (Wesco) and Jacob and Harmke Verburg (collectively the Respondents). On March 24, 1995, Richmond Citizens for Responsible Growth, Inc. (RCRG) appealed from the Opinion and filed a petition for a declaratory ruling (the Petition). On April 6, 1995, the Respondents filed a Motion to Dismiss the Petition (the Motion). On May 23, 1995, RCRG filed a Memorandum in Opposition to the Motion. On June 1, 1995, the Agency of Natural Resources (ANR) filed a Notice of Appearance and Notation of Witnesses and Exhibits. On June 2, 1995, the Respondents filed a response to RCRG's May 23, 1995 Memorandum, and a Prehearing Conference Statement. On June 5, 1995, RCRG, Judith and John Van Houten, and Barry Washburn, respectively, filed party status petitions. On June 5, 1995, Chair John T. Ewing convened a prehearing conference in Montpelier, Vermont. On June 13, 1995, the Respondents filed a Memorandum in Opposition to RCRG's Petition for Party Status; a Memorandum in Opposition to Mr. and Mrs. Van Houten's Request for Party Status; and a Joint Statement of Stipulated Facts and Exhibits. On June 13, 1995, RCRG filed a Reply Memorandum relative to the Motion. On June 28, 1995, the Board deliberated regarding preliminary issues. On June 30, 1995, the Board issued Re: Wesco, Inc. and Jacob & Harmke Verburg, Declaratory Ruling Request #304, Memorandum of Decision (June 30, 1995) in which it (i) denied the Respondents' Motion; (ii) granted Mr. Barry Washburn party status; (iii) denied Mr. and Mrs. Van Houten party status; and (iv) confirmed the Chair's appointment as administrative hearing officer pursuant to 10 V.S.A. § 6027(g) and EBR 41(B). On July 18, 1995, the parties filed prefiled testimony and exhibits. On July 21, 1995, the Respondents filed objections to the admission of testimony. On July 25, 1995, Chair Ewing convened a hearing with the following parties participating: Wesco, Inc. and Jacob and Harmke Verburg by John R. Ponsetto, Esq., David Simendinger, and Jacob and Harmke Verburg Richmond Citizens for Responsible Growth by William Roper, Esq., and Jeff Forward Barry Washburn, Pro Se On July 28 and 31, 1995, parties filed proposed findings of fact and conclusions of law. On August 23, 1995, Chair Ewing issued a proposed decision which was sent to the parties. Pursuant to 10 V.S.A. § 6027(g), parties were allowed to request oral argument before the Board. In addition, parties were allowed to file written objections. On September 7, 1995, the Respondents filed a request for oral argument, and an extension until October 13, 1995 for the submission of written objections. On September 7, 1995, the Petitioners filed a conditional request for oral argument, and a memorandum seeking modification of the proposed decision. On September 7, 1995, ANR filed a letter stating that it had no objection to the proposed decision. ANR did not request oral argument. On September 18, 1995, Chair Ewing issued a memorandum to the parties changing the date for oral argument to November 29, 1995 due to scheduling conflicts. The deadline for the filing of the Respondents' written objection to the proposed decision was extended to November 8, 1995. On November 1, 1995, the Board issued a Notice of Oral Argument to the parties informing them that oral argument would be convened on November 29, 1995. Prior to November 29, 1995, the Respondents informed the Board that it no longer sought oral argument. The Respondents did not file written objections to the proposed decision. On November 29, 1995, the Board deliberated concerning this matter, and, following a review of the proposed decision and the evidence and arguments presented in the case, declared the record complete and adjourned. This Petition 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. See Petition of Village of Hardwick Electric Department, 143 Vt. 437, 445 (1983). II. ISSUE Whether, pursuant to 10 V.S.A. § 6001(3) and EBR 2(A)(2), Wesco's proposed construction of a gasoline and diesel service station, with convenience store and deli, is a development that requires an Act 250 permit because such development's involved land as defined under EBR 2(F)(1) exceeds 10 acres. III. FINDINGS OF FACT 1. Jacob and Harmke Verburg own a dairy farm of over 300 acres in the Town of Richmond, Vermont. 2. Richmond has adopted permanent zoning and subdivision bylaws and has not elected by ordinance adopted under Chapter 59 of Title 24 V.S.A. to have Act 250 jurisdiction apply to construction of improvements for commercial purposes on land involving more than one acre of land. 3. On December 3, 1986, Mr. and Mrs. Verburg received approval from the Richmond Planning Commission for a three lot subdivision. 4. On December 23, 1986, Mr. and Mrs. Verburg received deferral of permits issued by the State of Vermont for Lots #1 and #2. Lot #1 is 8.89 acres and Lot #2 is 6.64 acres. Combined, Lots #1 and #2 are 15.53 acres. 5. On January 23, 1987, Wesco and Mr. and Mrs. Verburg entered into a purchase and sale agreement and option agreement whereby Mr. and Mrs. Verburg agreed to convey Lots #1 and #2 to Wesco. Mr. and Mrs. Verburg also granted Wesco an option to purchase Lot #3. The January 23, 1987 agreement terminated in accordance with its terms; there was no transfer of title or any other interest in Lots #1, #2, or #3; and no construction commenced during the term of the January 23, 1987 agreement. 6. Mr. and Mrs. Verburg and Wesco entered into a second purchase and sale agreement on January 5, 1995 (the Agreement). The Agreement contains the entire agreement and understanding between the parties and supersedes any and all prior agreements between the parties. 7. The premises (the "Premises") to be conveyed pursuant to the Agreement is described in paragraph 1 and Exhibit B of the Agreement. 8. The Premises is comprised of Lot #2 and a perpetual easement over a portion of Lot #1 (the "Easement"). The Easement is 1.46 acres in size (the "Easement Area"). The Premises in total comprises 8.10 acres. The Premises is to be conveyed subject to a sixty (60) foot right-of-way (the "Right-of-Way") across Lot #2 to Lot #1. 9. Wesco proposes to construct and operate a gasoline and diesel station, convenience store and deli on Lot #2 of the Premises, with the wastewater disposal system for the aforementioned to be constructed within the Easement Area portion of the Premises (the "Project"). Wesco will not construct improvements outside the Premises. 10. Agreement Exhibit B describes the Premises as follows: Beginning at an iron pipe located in the southwesterly sideline of the U.S. Route 2 right of way, said pipe marking the easterly or northeasterly corner of the herein described land. Thence S 58 36' 57" W 600.00 feet to an iron pipe; thence N 49 53' 07" W 698.53 feet to an iron pin in the southeasterly sideline of the Central Vermont Railway right of way; thence S 78 31' 41" E 288.07 feet to an iron pipe; thence N 65 30' 00" E 503.00 feet to an iron pipe in the southerly sideline of State of Vermont I-89 property; thence S 47 11' 04" E 150.00 feet to an existing concrete monument; thence N 47 33' 53" E 19.70 feet to an existing concrete monument; thence S 42 14' 18" E in the southwesterly sideline of the U.S. Route 2 right of way 270.49 feet to the iron pipe marking the point or place of beginning. Said land is depicted as Lot #2 containing 6.64 acres, more or less, on the survey referred to in Paragraph 1 of this Agreement. Together with the benefit of a perpetual easement for the subsurface conveyance and disposal of wastewater within the following described area: Beginning at the iron pipe in the southerly sideline of State of Vermont I-89 property, which iron pipe marks the northwesterly corner of the above-described Lot #2; thence S 65 30' 00" W 31.68 feet to a point; thence N 47 11' 04" W 240.92 feet to a point; thence N 60 01' 24" W 303.71 feet to a point; thence S 29 58' 36" W 163.87 feet to a point; thence N 60 01' 24" W 243.00 feet to a point; thence N 29 58' 36" E 193.87 feet to a point in the southerly sideline of State of Vermont I-89 property; thence proceeding in the southerly and southwesterly sideline of said State of Vermont I-89 property consecutively S 60 01' 24" E 549.36 feet to a point and S 47 11' 04" E 251.53 feet to the iron pipe marking the point or place of beginning. Said perpetual easement area contains 1.46 acres. The perpetual easement includes the right to construct, install, repair, maintain, and replace a mound or other subsurface disposal field required and approved by the Sate of Vermont to benefit the Project and any future improvements on Lot #2, together with all piping, valves, and other improvements and appurtenances necessary to convey wastewater to the mound or other subsurface disposal system and the right to take all actions necessary to comply with any permit conditions issued for the construction of the improvements on Lot #2 and the construction of the wastewater disposal system. All construction of improvements shall be accomplished within the defined easement area and there shall be no right to enter on adjacent lands for purposes of construction, installation, maintenance, repair, or replacement of the wastewater disposal system, nor shall any adjacent lands be used for purposes incident to construction, including but not limited to access purposes, storage of spoils, or staging and storage of construction vehicles and equipment. No other use of the land within the easement area shall be permitted which would interfere with the easement right and purposes described herein, nor be in violation of the terms and conditions of the permits issued by the State of Vermont for the use and construction of the wastewater disposal system within the easement area. Included with the easement right shall be the right to install subsurface electrical lines within the easement area which are necessary and appurtenant to any wastewater disposal system constructed. By acceptance and the recording of these easement rights, the easement owner hereof agrees to indemnify and hold the owner of the fee in the easement area harmless against and from all loss, liability, damage or expense to any third party resulting from the actions or inactions of the easement owner, its agents, contractors or employees, within said perpetual easement area, and further agrees that, upon completion of any construction, the easement owner shall restore the surface of the easement area as nearly as reasonably practicable and as promptly as weather allows, to substantially the condition existing prior to the commencement of said construction. Nothing in this provision shall be construed to prohibit the owner of the easement rights from altering the elevation and topography of the easement area to accommodate a mound system or other approved subsurface disposal system. The property described as Lot #2 hereinabove is conveyed subject to a 60 foot right of way as depicted on the survey described in Paragraph 1 of this Agreement. Said right of way shall be for the benefit of Lot #1 for the purposes of providing access to Lot [#]1 from the approved highway access on U.S. Route 2. The owner of Lot #2 may use the area comprising the 60 foot right of way for access to U.S. Route 2, and may use the approved highway access and the area subject to the 60 foot right-of-way area for any other purpose as long as it does not unreasonably interfere with vehicular access to Lot #1. 11. Mr. and Mrs. Verburg and their successors in title may use the Easement Area for uses that would not interfere with Wesco's use of the Easement Area and would not be in violation of the terms and conditions of State of Vermont permits for the use and construction of the wastewater disposal system within the Easement Area. 12. The soils on Lot #1 are the only soils available for sewage disposal for Lots #1 and #2. The contours and available area for septic on Lot #1 were first mapped for a proceeding before the Commissioner of the Department of Environmental Conservation. RCRG introduced this map as Exhibit R-5. In comparing R-5 with Wesco Exhibit 2, Wesco's current engineer, Douglas Fitzpatrick, testified that the Easement Area included virtually all the available capacity for sewage disposal. 13. It is possible that a portion of the Easement Area could be used by Lot #1 for its own septic system, not-withstanding the terms of the Easement. 14. The Project's wastewater disposal system will have sufficient excess capacity such that a residence could be built on Lot #1. 15. Lot #2 has frontage on U.S. Route 2 at the I-89 Richmond interchange. Lot #1 is north of and adjacent to Lot #2. Lot #1 has no frontage on U.S. Route 2 and no vehicular access to U.S. Route 2 other than the Right-of-Way. The Right-of-Way may run through a portion of the Easement Area. 16. Paragraph 25 of the Agreement provides that "[t]he obligations, covenants, representations, warranties, and remedies set forth in this Agreement shall not merge with the transfer of title, but shall remain in effect during the period of the ownership of the Premises by [Wesco]." 17. Other than as sellers and purchasers under the Agreement, Wesco, its stockholders and officers, and Mr. and Mrs. Verburg are not affiliated with each other for profit, consideration, or any other beneficial interest derived from the partition, division or development of land. 18. Mr. David Simendinger, the President of Wesco, does not know whether Wesco is obligated to pay all or a portion of the property taxes assessed by Richmond on Lot #1 if Wesco purchases the Premises. The Agreement is silent as to Wesco's obligation to pay property taxes after the Premises' conveyance. IV. CONCLUSIONS OF LAW Pursuant to 10 V.S.A. § 6081, in towns with permanent zoning and subdivision bylaws, such as Richmond, construction of improvements for commercial purposes on a tract or tracts of land, owned or controlled by a person, involving more than ten acres of land requires an Act 250 permit. 10 V.S.A. § 6001(3) and EBR 2(A)(2). In determining the amount of land involved for jurisdictional purposes, "the area of the entire tract or tracts of involved land owned or controlled by a person will be used." See EBR 2(A)(2). EBR 2(F)(1)-(3) defines involved land. EBR 2(F)(1) "addresses the size of the tract upon which the improvements are located," whereas EBR 2(F)(2) and (3) "pertain to tracts which are physically separate from the improved tract". In re: Stokes Communications Corporation, No. 94-208, slip op. at 6 (Vt., July 21, 1995). Therefore, EBR 2(F)(1) is controlling in this Petition. EBR 2(F)(1) defines "involved land" as "[t]he entire tract or tracts of land upon which the construction of improvements for commercial or industrial purposes occurs." In 1985, the Legislature ratified the Board's rules such that they have the same effect as any law passed by the Legislature in the first instance. The ratified Board rules have "effectively become part of the Act 250 legislative scheme codified at chapter 151 of Title 10." In re Barlow, 160 Vt. 513, 521 (1993); In re Spencer, 152 Vt. 330, 336 (1989). The Board has previously held in In re: Salvas Paving, Inc., Declaratory Ruling #229 (June 20, 1991) that "jurisdiction occurs if the tract or tracts of land involve more than ten acres, not the construction of improvements." Id. at 6. The Board further concluded: Jurisdiction turns on the acreage of the tract of land upon which construction occurs; this "bright line" rule is administrable, reasonable, and it is reasonably well crafted to serve the purpose of [Act 250]. Id. at 7 (quoting In re: G.S. Blodgett, Declaratory Ruling #122 (May 18, 1981) (emphasis in original)). See also, Re: Charles and Barbara Bickford, #5W1186-EB, Findings of Fact, Conclusions of Law, and Order at 25 (May 22, 1995). In this case, the construction of improvements by Wesco will take place on both Lot #2 (which Wesco will purchase from Mr. and Mrs. Verburg) and on Lot #1 (over which Wesco will obtain the Easement from Mr. and Mrs. Verburg). Both Lot #2 and Lot #1 are "tracts of land upon which the construction of improvements for commercial or industrial purposes [will occur]." See EBR 2(F)(1). For jurisdictional purposes, the Board considers the acreage of the "entire tract or tracts." See EBR 2(A)(2) and 2(F)(1). The total acreage of Lots #1 and #2 is 15.53 acres. The fact that the Easement limits Wesco's construction of improvements to the Easement Area portion of Lot #1 does not alter the fact that Lot #1 is a tract upon which commercial improvements will occur. The Board has, in the past, also recognized that a tract of land can be created by means other than a fee simple conveyance. For example, in Re: Shelburne Farms Resources, Inc., #4C0660-1-EB, Findings of Fact, Conclusions of Law, and Order (Sept. 8, 1987), the landowner (SFR) created a number of lots through leases. The Board held: Although the transfer of the property interest in each lot was accomplished by means of a lease instead of a deed, the result has been the same as a transfer by deed for the following reasons: Each lease is essentially perpetual because it is automatically renewed for an unlimited number of ninety-nine year terms; the full consideration for the lease was paid at the time of the transfer and no further payment is due to the lessor; there are no reentry or termination provisions in the leases; the remedy for failure to pay real estate taxes or other obligations is through usual mortgage foreclosure actions; and the lessor has not retained any interest or control over activities on these properties beyond those which are customary in residential protective covenants. Consequently, SFR cannot be considered to be the owners of these leasehold lots, nor can it be found that SFR controls these lands. Id. at 5. There are certain similarities between the leases used in Shelburne Farms and the Easement: they are perpetual; full consideration has been paid and no further payment is due; and they convey interests in land which are alienable. The Board concludes, however, that the Easement does not sever the Easement Area from Lot #1 such that it is tantamount to the creation and conveyance of a 1.46 acre tract of land owned exclusively by Wesco. The hallmark of a tract of land owned in fee simple absolute is an "estate limited absolutely to a person and his or her heirs and assigns forever without limitation or condition." Blacks Law Dictionary 554 (5th ed. 1979). In contrast, an easement is simply the "right of use over the property of another." Id. at 457. Mr. and Mrs. Verburg will remain as the fee owner of all of Lot #1 after they convey the Premises to Wesco. Mr. and Mrs. Verburg will be able to continue to use the Easement Area within Lot #1 provided such use does not interfere with Wesco's rights. Mr. and Mrs. Verburg also have the right to use the Right-of-Way for access to Lot #1, and a portion of the Right-of-Way may run through the Easement Area. Wesco has also obligated itself to indemnify Mr. and Mrs. Verburg from all loss to any third party due to Wesco's actions or inactions within the Easement Area. The Board concludes that after the Premises' conveyance, Mr. and Mrs. Verburg will retain an interest in the Easement Area, and potential legal liability for activities occurring therein, beyond that which is customary with a fee simple absolute conveyance or the leasehold conveyance in Shelburne Farms. See Shelburne Farms, at 5. For example, indemnification post-conveyance is necessary because of Mr. and Mrs. Verburg's continued fee simple ownership of Lot #1 and the potential for joint tort liability with Wesco for activities occurring within the Easement Area. See Peters v. Mindell, 159 Vt. 424, 427 (1992). The scope of indemnification includes liability arising out of an employee or agent of Mr. and Mrs. Verburg working within the Easement Area pursuant to Mr. and Mrs. Verburg's right to use the Easement Area for purposes which are not inconsistent with the Easement. Mr. and Mrs. Verburg also retain the rights and liabilities ascribed to them by the Agreement post-conveyance notwithstanding the general doctrine of merger. See Chimney Hill Owners' Association, Inc. v. Antignani, 136 Vt. 446, 454 (1978); Thomas v. Johnson, 108 Vt. 363 (1936). The Agreement's survival ensures that Mr. and Mrs. Verburg have contractual rights to make use of all of Lot #1, including the Easement Area. In contrast, the relationship between the parties to a fee simple absolute conveyance is usually limited to the warranties contained in the deed, if any, and do not include the right to enter and make use of the conveyed premises. Mr. and Mrs. Verburg could build a residence on Lot #1 by using the Project's wastewater disposal system's excess capacity or by constructing a second septic system within the Easement Area. This is dissimilar from Shelburne Farms wherein SFR--the grantor--had no right to construct and own improvements on the conveyed lots. See Shelburne Farms, at 3. Finally, while Wesco's President did not know whether Wesco is obligated to pay all or a portion of the property taxes assessed by Richmond on Lot #1, by statute Mr. and Mrs. Verburg remain liable for such taxes post-conveyance. See 32 V.S.A. § 3651. The payment of property taxes post-conveyance is not an attribute of a fee simple conveyance. In Shelburne Farms, the lessees were obligated to pay all real estate taxes and other assessments levied against the lots. See Shelburne Farms, at 4 The Board concludes that the Easement does not convey exclusive ownership or control over the Easement Area to Wesco such that the Easement Area is, in effect, a separate tract of land from Lot #1. Mr. and Mrs. Verburg will retain fee ownership of, and the right to use, all of Lot #1 post-conveyance. The Board may not disregard Mr. and Mrs. Verburg's ownership interest simply because Wesco will own an interest in Lot #1, even if limited to the Easement Area. See Stokes, slip op. at 7. The Project is a development under 10 V.S.A. § 6001(3) and EBR 2(A)(2) because Wesco's ownership of the Premises will result in its ownership and control of two tracts of involved land in excess of 10 acres. Accordingly, the Project requires an Act 250 permit prior to the commencement of construction. V. ORDER The Project is subject to Act 250 jurisdiction and an Act 250 permit must be obtained prior to the commencement of the Project's construction. Dated at Montpelier, Vermont, this 7th day of December, 1995. ENVIRONMENTAL BOARD s/s John T. Ewing John T. Ewing, Chair Rebecca Nawrath John M. Farmer Arthur Gibb Samuel Lloyd William Martinez Steve E. Wright c:\decision\dr304.dec (dp2)