February 2001 - Vermont Bar Examination Essay Questions - Model Answers

[Model Answer - Question I]
[Model Answer - Question II]
[Model Answer - Question III]
[Model Answer - Question IV]
[Model Answer - Question V]
[Model Answer - Question VI]

Examination Essay Questions - February 2001
MODEL ANSWER - QUESTION I - FEBRUARY 2001


       This fact pattern is not uncommon.  Successful businesspeople who
  start their businesses from scratch are two busy running the business and
  rarely do any tax planning in anticipation of retirement and sale of the
  business.

       (1)   Bill will pay ordinary income tax on the payments he receives
  for the covenant not to compete as he receives them.  They are not subject
  to FICA (social security), FUTA (unemployment tax) and Medicare
  self-employment taxes.  (Under section 197 of the Internal Revenue Code,
  the covenant not to compete is a "section 197 intangible" and Takeover must
  amortize those payments ratably over 15 years, even though the payments are
  made over only five years.)

       (2) Bill, Dave and Steve will prefer to sell their stock to Takeover,
  rather than have the corporation sell its assets, because a stock sale will
  result in long term capital gains treatment of the gain they realize from
  the sale.  Dave's basis in his 45% of the corporation's stock is Bill's
  basis in that stock when it was given to Davie in 1974.  Bill's basis in
  his stock is about $20,000, the sum (i) the $15,000 he paid Zeke to buy the
  business, plus (ii) the $25,000 he paid for the St. Albans land, minus
  (iii) the one-half of his stock that he gave to Steve.  Bill's original
  $60,000 basis in the buildings would have been substantially depreciated by
  the time Bill gave the stock to Dave.  Steve acquired his stock by gift
  from Bill, and so his basis in his stock is the same as Bill's basis was in
  the shares when Bill gave them to Steve, which is also about $20,000.  If
  Bill's, Dave's and Steve's top marginal tax rate is above the %15 bracket,
  which will be the case by reason of the sale, then each of them will pay a
  capital gains tax equal to 18% of (i) the gross proceeds they receive for
  their stock, minus (ii) their respective tax bases in their stock and the
  costs to them of the sale.

       If the transaction is structured as an asset sale, the proceeds will
  be taxed twice.  The corporation will pay taxes on the gain it realizes
  from the sale, and the shareholders will pay taxes on the distribution of
  the proceeds from the corporation to them.

       Takeover will not want to purchase the stock because the corporation,
  which Takeover will then own, will still have to pay any of the
  corporation's debts whether disclosed or undisclosed.  Equally important,
  if Takeover buys the corporation's assets, then Takeover can write off part
  of its purchase price against profits b depreciating the buildings and
  tools, and by amortizing the Section 197 items which include not only the
  covenant not to compete, but also good will, the value of the corporation's
  work force, business books and records, operating systems customer lists,
  copyrights, designs, knowhow, licenses, permits, franchises, trademarks and
  trade names.

       (3) If the transaction is structured as an asset sale, it will be an
  "applicable asset sale" under section 1060 of the Code because (i) it
  involves a transfer of assets which constitute a trade or business, and
  (ii) Takeover's basis in those assets is determined by reference to the
  purchase price.  Section 1060 requires the corporation and Takeover to make
  a reasonable allocation of the $1,500,000 purchase price among the several
  assets being bought and sold.  Individual taxpayers pay tax on capital
  gains at a preferential 18% rate for assets held more than five years (8%
  for individuals in the 15% tax bracket).  Corporations, however, are taxed
  on their net capital gains at their regular tax rates except under special
  circumstances that do not apply here.  Therefore, in an asset sale, the
  corporation will want to allocate as little value as possible to the
  buildings and tools because they will have been fully depreciated and
  depreciation will be recaptured at ordinary income rates, as much as
  possible to the land because it will have lost none of its basis, and as
  little as possible to the section 197 intangibles because their basis will
  be the $15,000 Bill paid to Zeke to buy the business.  Takeover will take
  the opposite position on each item because it wants to maximize its ability
  to write the several assets off as quickly as possible, for example, by
  assigning a high value to the tools and depreciating that value over the
  class life to which they belong under Section 168 of the Code, to the
  section 197 intangibles to write them off over 15 years, then to the
  buildings to write them off over their depreciable life, and as little as
  possible to the land because it is not depreciable.
       
   
MODEL ANSWER - QUESTION II - FEBRUARY 2001
 

       (1)	Describe the legal steps you will take on Samuel's behalf to
  settle David's estate.

       As the attorney representing Samuel, I will advise him to take the
  following steps to administer the estate of his father, David Dearborn.

       First, Samuel should file a petition to open the estate in the
  Washington Probate Court as this is the county where his father was a
  resident at the time of his death and I, as his attorney, will file my
  Notice of Appearance.  Once the petition to open the estate is filed,
  Samuel will provide notice to all interested parties.  Pursuant to 14
  V.S.A. §903, Samuel will request to be appointed administrator of the
  estate as there is no will and therefore, no designation of an executor. 
  Samuel is the natural choice to be the administrator as he is next of kin
  and is a Vermont resident.  Pursuant to 14 V.S.A. §904, where the principal
  administration is in Vermont, the court shall appoint an administrator
  domiciled in the State of Vermont.  Prior to the issuance of letters of
  administration, the administrator is required to give a bond with one or
  more sureties to secure the proper administration of the estate.  14 V.S.A.
  §906.  Once Samuel is appointed as the administrator, he must take the
  following steps:

       1. 	He must inventory all of the assets of the estate within 30
  days.  The inventory includes listing all of the assets and the fair market
  values for the assets as of the date of death of the decedent and the type
  and amount of any lien or encumbrance that exists on any item.  The
  inventory is filed with the probate court and copies are served.  As the
  value of the stamp collection is unknown, Samuel, as the administrator,
  shall have it appraised.  14 V.S.A. §1052.

       2. 	To administer, according to the law, all assets, pay and
  discharge all debts, legacies and charges.

       2.  This includes providing notice to creditors by
       publication in the local newspaper once per week for two
       successive weeks.  V.R.P.P. 4(e).  The first notice must be
       published within twenty days after the order for
       administration is granted, after which creditors have four
       months to present claims.  The administrator can waive notice
       to creditors but then creditors have up to three years to
       present claims.  14 V.S.A. §1203

       b.  The administrator then determines which claims are
       to be allowed.  14 V.S.A. §1206.

       c.  After four months from the date of first publication
       of notice to creditors, the administrator shall pay claims
       allowed against the estate in the order of priority allowed
       by the statute.  The order of priority is as follows: the
       costs and expenses of the estate administration; reasonable
       funeral and burial expenses; then all other claims.  14
       V.S.A. §1205-1207.

       d.  For the real property (condominium) in New York, an
       ancillary estate administration in New York will have to be
       opened for the proper distribution of this property.  If the
       property is to be sold, a license to sell will need to be
       obtained from the New York probate court.

       e.  The estate proceeds will be distributed to
       Samuel and Elizabeth as they are the only heirs at law.

       3. 	Samuel must file any necessary federal and state estate tax
  returns and pay all state and federal inheritance and transfer taxes.

       4. 	Once final distribution of the assets and payment to
  creditors has been made, Samuel must render an accounting of the estate
  administration within one year to the probate court and close the estate.

       (2)  	Is the handwritten piece of paper dated January 23, 1992 a
  valid bequest?  Discuss.

       In general, Vermont does not recognize holographic (handwritten) wills
  unless they are executed with all the formalities required by Vermont law. 
  There must be evidence of the testator's intent to make a bequest and he or
  she must have the testamentary capacity to make a will.  The document must
  be in writing, signed by the testator and witnessed by three others.

       There is no evidence from the facts as given of the capacity of the
  testator or his intent to make a will.  Furthermore, the paper is in
  writing but is not signed or witnessed.  Thus, the handwritten piece of
  paper dated January 23, 1992 is not a valid bequest.

       (3)  	How should the estate's proceeds be distributed?  

       According to Vermont's laws of intestacy, Samuel and Elizabeth, as the
  only children of the deceased, will each inherit one-half of all assets
  after the payment of the court's fees, expenses of administration and
  payment to the creditors.  The disposition of the assets will be as
  follows:

       Credit cards: Will be paid off with assets from the estate.

       Condominium in New York:  There will have to be an
       ancillary estate administration in New York to dispose of
       this asset.  The condominium has a mortgage that needs to be
       satisfied.  There are two options: Elizabeth can assume the
       mortgage with the bank's consent, or the condominium can be
       sold, the mortgage paid off and the proceeds distributed to
       Samuel and Elizabeth.

       Stocks: The stock shares will be transferred to Samuel
       and Elizabeth or they can be  liquidated, if necessary.
        
       401(k): In all likelihood, David designated a
       beneficiary in the event of his death.  Whomever he listed as
       the beneficiary will receive this asset and it will not be
       subject  to the probate administration.  If there is no
       beneficiary designation, then this asset will be probated and
       distributed to the heirs or it can be liquidated, if
       necessary.

       Stamp collection: Once appraised, the stamps can either
       be divided between Samuel and Elizabeth so that each has
       one-half the collection's value, or the collection can be
       sold and the proceeds divided between them.

       Checking account: If this asset still exists after the
       payment to creditors and was not jointly held with someone
       other than Samuel or Elizabeth, any balance will be
       distributed to Samuel and Elizabeth in equal shares.
       


MODEL ANSWER - QUESTION III - FEBRUARY 2001 


1. The type of relief that I would seek on Richard's behalf would
consist of injunctive relief to prevent further construction, see Welch v
Barrows, 125 Vt. 500, 508 (1966), 42 Am Jur. 2d Injunctions §50, and
monetary damages for trespass and to restore the property to its original
condition. To obtain either type of relief I would need to prove that the
land was Richard's, but see Averill v. Vermont Valley Railroad, 99 Vt. 293,
299-300 (1914), cf 42 Am. Jur. 2d Injunctions §107. If a survey had been
done of the property, presumably that would enable me to prove that the
construction occurred on Richard's land. If no such survey had previously
been performed it may very well be necessary to arrange to have one
performed. In order to obtain injunctive relief I would need to prove that
monetary damages were inadequate to give Richard the relief to which he is
entitled for the construction occurring on his property. Vermont v. Town
of Castleton, 138 Vt. 250, 256-7 (1980) (irreparable injury), 42 Am. Jur.
2d Injunctions §102. I would also need to prove the monetary amount
necessary to restore the property to its original condition.

2. I would file a complaint requesting injunctive relief and
damages. I would initially request a TRO be issued without written or oral
notice to Sam ordering the cessation of construction activities. In order
to obtain the TRO it will be necessary to clearly show specific facts, by
affidavit or by verification of the complaint that immediate and
irreparable injury, loss or damage will result to Richard before Sam or his
attorney can be heard in opposition. V.R.C.P. 65(a). A request for a
preliminary injunction could also be made by motion pursuant to V.R.C.P.
65(b).

3. Richard should be told that the first thing that will be done is
to apply for a TRO. If the TRO is issued, it can immediately stop
construction for up to ten days. V.R.C.P. 65(a). That initial order can
be extended for an additional ten days for good cause shown. V.R.C.P.
65(a). The order can be further extended to the earliest available
hearing date if necessary. V.R.C.P. 65(a). The Court at the hearing may
further extent the order for a period not to exceed ten days if necessary
for the hearing and determination of the motion. V.R.C.P. 65(a). At any
time after the TRO is issued Sam has the right on two days notice to
request the Court to dissolve or modify the TRO. V.R.C.P. 65(a). In any
case, Richard should understand that the TRO is a short-term measure up
until such time as a preliminary injunction can issue. At the hearing on
the application for preliminary injunction, Richard will be required to
present evidence that the land belongs to him, but see Averill, supra, and
that construction is occurring thereon. The Court may also advance trial
of the action and consolidate it with the hearing on the application for
preliminary injunction. V.R.C.P. 65(a).

The Court will, unless good cause is shown for waiver, require Richard
to give security as precaution against costs and damages that Sam may
suffer if he is found to have been wrongfully restrained or enjoined by the
TRO or the preliminary injunction. V.R.C.P. 65(a). Richard should
understand that in the event it turns out that he does not own the land or
for whatever reason is not entitled to injunctive relief, he may be
required to pay Sam for the costs and damages that he suffers.


If the trial of the action was not consolidated with the hearing on
the preliminary injunction a trial will be held which will decide whether a
permanent injunction will issue.

4. The action should be filed in Superior Court. Venue would be
appropriate in Washington County where the land is located. See 12 V.S.A.
§402.

5. I would expect from the facts given that Sam's primary defense
will be that he owns the property and has a legal right to build on it.
Sam will probably also claim that an equitable estoppel exists based upon
his discussion with Richard's daughter and her failure to voice any
objection. The doctrine of equitable estoppel operates to prevent a party
from asserting rights which might have otherwise existed against another
party who has in good faith changed his position in reliance upon earlier
representations. My Sister's Place v. the City of Burlington, 139 Vt. 602
(1981). 42 Am. Jur. 2d Injunctions, §101. A party asserting an estoppel
has the burden of establishing the following four elements:

1) The party to be estopped must know the facts;

2) The party being estopped must intend that his
conduct shall be acted upon or acts must be such that
the party asserting estoppel has a right to believe it is so
intended.;

3) The party asserting estoppel must be ignorant of
true facts; and

4) The party asserting estoppel must rely on conduct
of the party to be estopped to his
detriment. Wesco Inc. v. City of Montpelier, 739 A.2d 1241
(Vt. 1999).

Under the facts given, it is unlikely that the actions or inactions of
the daughter would be sufficient to be binding on Richard. Insufficient
facts are known to determine whether an agency relationship of any type
exists or even what the daughter's precise actions were. Even if it could
be assumed, however, that Sam in some manner changed his position and
relied upon the daughter, the doctrine of equitable estoppel is not invoked
in favor of one whose omissions or inadvertencies contributed to the
problem. Fisher v. Pool, 142 Vt. 162 (1982).


MODEL ANSWER - QUESTION IV - FEBRUARY 2001


Emily has a claim against Dylan for breach of fiduciary duty for
misusing the power of attorney. Dylan may also be criminally liable and
may be subject to an investigation by adult protective services. Dylan may
claim that he was authorized by the power of attorney to use Emily's
checking account but he clearly used it for his own benefit so that defense
is not likely to succeed.

Emily may also have a claim against Northern Vermont Savings, the
payor bank as defined in Article 4-105 (3), for cashing the $5,000 check
signed by Dylan. The bank may have breached their duty of ordinary care
under Article 4-104 of the Uniform Commercial Code. The $5,000 check was
signed by Dylan and the bank had no knowledge of the power of attorney.
Ordinary care may dictate that they note the signature on the check and
question Dylan's authority to sign. If the bank is liable for breaching
their duty of ordinary care, their liability is probably limited to the
amount of the check per Article 4-103 unless the bank can be shown to have
acted in bad faith in which case Emily may be able to recover additional
damages. Northern Vermont Bank may defend that, under the definition of
ordinary care in Article 3-103(a)(7), they are not required to examine the
instrument and so cannot be held liable for failing to note the
unauthorized signature.

Emily may also claim that Northern Vermont Savings was not authorized
to cash the $5,000 check because Emily was incompetent. However, even if
Emily can show she was incompetent at the time the check was presented, the
bank can claim they had no knowledge of her incompetence and thus they were
still authorized to cash the check as provided by Article 4-405.

Emily does not have any claim against Northern Vermont Savings for
dishonoring her check to Bob's Roofing as she did not have sufficient funds
to cover the check. The fact that this was unknown to her does not alter
her responsibility.

Emily does not have any claim against Mark. Mark is probably a holder
in due course as defined by Article 3-302 because he did not have notice
that Dylan's signature was not authorized. As a holder in due course Mark
probably takes the check free of any claim that Dylan was not authorized to
sign the check.

Bob's Roofing has a claim against Emily for the work they did. If she
does not pay them they will have a claim against her and she has no defense
unless there was a problem with the work they did. Bob's Roofing has no
claim against Dylan. Likewise they have no claim against either bank.
Northern Vermont was entitled to dishonor the check, and Mount Mansfield,
the presenting bank under Article 4-105(6) , can properly refuse to credit
the deposit to Bob's Roofing as the check was returned.


MODEL ANSWER - QUESTION V - FEBRUARY 2001


1. Officer Paul's testimony about each of Mrs. Wilson's
statements.

Officer Paul's testimony about Mrs. Wilson's statements will be
hearsay evidence, and can only be admitted if an exception is applicable.
I will discuss each statement and the possible exceptions, seriatim. Her
first statements were that she had "come upon an auto accident a couple of
miles up the road," and that "an orange car with a Duke's Taxi light on top
had lost control and slid into the ditch." These statements may be
admissible as "excited utterances" under Rule 803(2), if Ms. Wilson was
still under the stress of excitement caused by the event, in this case, the
car accident she witnessed. In order for these statements to be admitted
under this exception we would have to establish that the event had occurred
recently, that W. was still excited at the time of the statements, and
that the statements were a product of that excitement. See: State v.
Ives, 162 Vt. 131 (1994). They might also be admissible as "present sense
impressions" under Rule 803(1), because these statements describe an event,
and an argument can be made that they were made close enough in time to be
"immediately thereafter."

Wilson's statement to Paul that: "the driver of the taxi had told her
that he thought he hit some black ice in the road and had lost control and
went into the ditch," likewise may fit into the excited utterance
exception, but cannot be admitted into evidence unless "the driver"'s
statement also fits into a hearsay exception. If it can be established
that "the driver" is the defendant in this action, Duke, Duke's statement
to Wilson is not hearsay, because, under Rule 801(d)(2) it is an admission.
It is an admission because it is offered against him and is his own
statement. Therefore, this evidence is admissible.

Wilson's statement to Paul that the passengers told her they were not
hurt is also double hearsay. Wilson's statement may still fit into the
excited utterance exception, but a hearsay exception must be applicable to
the passengers' statement to her as well. Their statement is covered by
the exception in Rule 803(3) for a statement of the declarant's then
existing physical condition. Therefore, this evidence is also admissible.

Finally, Wilson's statement that the driver "seemed dazed or drunk" is
likely admissible as a present sense impression (she is describing the
driver's condition, immediately after perceiving it), or as an excited
utterance. (See description above). Her opinion about these issues is
admissible. Lay opinions on the question of drunkenness (unlike drug
intoxication) are often admitted. All that is required for a lay opinion
on any subject to be admitted is that it be "rationally based on the
perception of the witness," and "helpful to .. the determination of a fact
in issue." Rule 701. In this case, Wilson's statement was clearly based
on her own perception, and is helpful to the jury in deciding the question
of whether D was under the influence at the time of the accident.

2. Paul's description of the road conditions and his
observations at the site of the accident.

Paul's description of the road conditions and his observations are
admissible evidence, because they are not hearsay, and are clearly
relevant. No expertise is required to describe these matters.

3. Paul's account of the passengers' statements to him and
behavior at the accident scene.

The passenger's statements are hearsay if offered through Paul, and
cannot be admitted unless an exception applies. Paul's account of their
behavior, however, is non-hearsay, relevant evidence and is therefore
admissible. Their "moaning" is not a "statement" and therefore is not
hearsay, and can be admitted. Their statements as to the cause of the
accident may arguably be admissible as either present sense impressions or
excited utterances, for the reasons described above. Certainly, the fact
that they are still in the car, moaning, suggests that they are still under
the "excitement" of the event in question (the accident). However, the fact
that their statement was not made spontaneously, but in response to Paul's
question, would be a factor weighing against the applicability of either of
these exceptions. No other obvious exception applies to this statement.
The statements they made regarding their physical condition ("sore backs")
are probably admissible under the then existing physical condition
exception described above, although this information is of marginal
relevance to the criminal charges we're pursuing here. Arguably this
evidence is relevant to demonstrate that the other statement regarding the
cause of the accident is reliable, in that the passengers are not in such
terrible physical distress that they can't give an accurate report. Their
final assertion, that they did not need an ambulance, arguably is also a
description or reference to their physical condition or intent (i.e. we're
not feeling so bad we need an ambulance) and is therefore excepted from the
hearsay rule. This statement is also arguably relevant, and therefore
admissible, primarily to show that the passengers' other statement
regarding the cause of the accident was credible, as the passengers were
conscious, aware, and not badly injured.

4. Paul's account of Duke's statements to Paul at the accident
scene.

Duke's statements to Paul are generally admissible as "admissions" as
described above. Duke's statement as to what Wendy said to him (that she
was going to have several friends come pull the car out of the ditch) is
hearsay, but may be admitted because it is not offered to prove its truth,
but simply to allow the jury to hear everything Duke had to say to the
officer at the scene, i.e. as part of the "res gestae."

5. Paul's account Duke's performance on roadside sobriety tests.

Paul's description of Duke's performance on these tests is
non-hearsay, and highly relevant to key issues in the case. No expertise
is required to testify to observations of such simple, straightforward
tests. This evidence is clearly admissible.

6. The results of Duke's preliminary roadside breath test.

The results of this test are not admissible. It is a preliminary
test that may be used to provide probable cause for Duke's detention and
for more accurate testing, but it is not intended to be a scientific test
that would meet the stringent Daubert standards.

7. Duke's refusal to submit to breath testing.

Duke's refusal is admissible evidence. All Vermont drivers are
deemed to have given implied consent to appropriate testing for alcohol use
as a condition of holding a driver's license and using the Vermont
highways, and must consent to such testing, or be subject to criminal and
civil sanctions. Therefore, the results of such testing are generally
admissible, and the refusal to submit to such testing is generally
admissible and may be used as evidence at a criminal trial. Assuming that
Paul followed all the statutory procedures required to ensure that Duke was
aware of his rights and options, Duke's refusal can be admitted into
evidence against him.

8. Lawson's testimony about his conversation with Duke on the
night of the accident, and Lawson's statements to Officer Paul. Discuss
any ethical implications for Lawson.

Lawson should refuse to testify, based on attorney-client privilege.
Any and all statements that Duke made to him were protected by the Rule 502
privilege, which defines a "client" as someone who "consults a lawyer with
a view to obtaining professional legal services from him." Only the
client or his representative has the right to waive this privilege,
therefore, even if Lawson appeared to be willing to testify, the Court
should exclude the evidence unless Duke waived his privilege. Lawson's
disclosure of client confidences to Paul in their conversation was a
serious ethical violation of the rule regarding the sanctity of client
confidences, and subject him to significant sanctions by the Professional
Conduct Board.

9. Wendy's testimony regarding Duke's statements to her on the
night of the accident.

Even though Wendy and Duke are "estranged" they are apparently still
husband and wife. Therefore, most of Wendy's testimony should be excluded
under Rule 504, the "husband-wife" privilege. Duke's statements to Wendy
regarding the alleged cause of the accident, his condition and drinking,
should all be treated as "confidential" under the privilege rule, i.e. as
not intended to be disclosed to third parties. The only information that
he clearly intended her to disclose to third parties was that he had gone
off the road and needed assistance getting the car out of the ditch. This
portion of their conversation could therefore be admitted. (Duke's
statement to Wendy is again admissible non-hearsay, because it is his
admission).

MODEL ANSWER - QUESTION VI - FEBRUARY 2001


1. We can initiate a declaratory judgement action to challenge the
validity or applicability of the Department's rule prior to Peter Pensive
actually filing a worker's compensation claim. The Vermont Administrative
Procedure Act, 3 V.S.A. §807, provides that an action for declaratory
judgement may be brought to challenge the validity or applicability of the
rule if the rule merely "threatens to interfere with or impair, the legal
rights or privileges of the plaintiff." It could readily be argued that
the rule threatens to impair the legal rights and privileges of injured
employees to receive the benefits and protections of the Vermont Workers
Compensation Act to receive compensation for mental as well as physical
injuries. The validity of the rule can be challenged prospectively as "its
threatened application... interferes with or impairs...the legal rights or
privileges of the plaintiff."

An alternative approach would be to work within the Department's own
rulemaking process, and to initiate a request to repeal the rule by
submitting a written request to the Department of Labor and Industry
pursuant to 3 V.S.A. §306.

2. The appropriate forum for this declaratory judgement action would
be in the Washington Superior Court, 3 V.S.A. §807. The forum for invoking
the agency's rule making procedure would be the Vermont Department of Labor
and Industry.

3. The investigation into the propriety of the promulgation and
adoption of the rule would primarily follow the requirements of the Vermont
Administrative Procedure Act. These would include: examination of the
enabling statute to determine if this rule is within the grant of statutory
authority to the Department 3 V.S.A. §845; Is the rule written in a clear
and coherent manner 3 V.S.A. §833; Has the rule properly addressed the
potential burden of the rule as it affects small businesses 3 V.S.A. §832a;
Was the rule pre-filed with the interagency committee on administrative
rules prior to its filing 3 V.S.A. §837; Was the rule in compliance with
the applicable filing requirements 3 V.S.A. §838; Was the rule published
prior to its adoption on at least two occasions pursuant to 3 V.S.A. §839;
Was a public hearing held on the proposed rule pursuant to 3 V.S.A. §840;
Was the proposed rule filed with the Secretary of State and the legislative
committee on administrative rules 3 V.S.A. §841; How long has it been
between filing of the proposed rule with the Secretary of State and the
legislative committee and the Department's adoption of the final proposed
rule 3 V.S.A. §843. Only failure to file with the Secretary of State, the
legislative committee on administrative rules or the interagency committee
on administrative rules would automatically prevent the rule from becoming
effective. Any other failure to satisfy the Vermont Administrative
Procedure's Act rule making requirements would not automatically result in
preventing the rule from taking effect.

In addition to complying with the rulemaking procedures set forth in
the Administrative Procedure Act, the agency must ensure that its rule is
within its statutory authority and is not arbitrary. If the rule runs
afoul of the Department's enabling legislation, or of the statutes relating
to worker's compensation enacted by the Legislature, it should be ruled
invalid.

4. If the firm were not successful in the declaratory judgement
action to the Washington Superior Court, an appeal could be taken to the
Vermont Supreme Court. If the firm were not successful in the alternative
procedure before the Vermont Department of Labor and Industry, an appeal
would be made to the Washington Superior Court pursuant to V.R.C.P. 75.


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