Sec., ANR v. Henry, ORDER, (E93-030) STATE OF VERMONT ENVIRONMENTAL COURT Secretary, Vermont Agency of Natural Resources, v. Docket No. E93-030 Leo R. Henry and Nancy Henry, Respondents. ORDER The Court's Decision and Order was issued on February 10, 1995. Respondents, the Tenants' Association, and the Receiver have all filed timely motions, including Respondents' motion for partial new trial. Oral argument on the motions was heard on March 22, 1995. Respondents are represented by Stephen Reynes, Esq.; the Secretary is represented by Christine Melicharek, Esq.; the Greenwoods Tenants' Association (GTA) is represented by Lila Shapero, Esq.; and the Lake Champlain Housing Development Corporation (LCHDC) is represented by Neil H. Mickenberg, Esq. Tenants' Association Motion The Tenants' Association has moved to correct an error of fact in the Court's Decision and Order dated February 10, 1995, which occurs at lines 17-18 of page 12 and the first full sentence on page 15. No party opposed that motion, although the Secretary argues that the penalty amount should not be reduced for any reason. The Tenants' Association's motion is GRANTED. The sentence on lines 17-18 of page 12 is hereby amended to read as follows: Until November 1, 1994, the rent for each lot in the cluster was $100 per month; as of that date the rent was raised to $110 (FN1) per month. The first full sentence at the top of page 15 is hereby amended to read as follows: After November 1, 1994 the rent for the mobile homes not in the cluster was raised to $125 per month. This change in the rent reduces the penalty as calculated by the court by $15 per month per mobile home in the cluster for the four months beginning in November 1994 and is addressed in this order together with Respondents' motions regarding the penalty. Receiver's Motions Lake Champlain Housing Development Corporation has moved to correct a clerical error in the date contained in Paragraph N of the February 10, 1995 Order. No party opposed that portion of the motion. The motion is GRANTED as to Paragraph N, which shall read "April 10, 1995" rather than "1994." Lake Champlain Housing Development Corporation also has moved to amend Paragraph H of the February 10, 1995 Order, requesting that the Receiver's duties not commence until the escrow account is fully funded in the amount of $83,963. No party filed a written opposition to this portion of LCHDC's motion, and Respondents supported this request. The Secretary's response to the Respondents' motions opposed any alteration or stay of the terms of the receivership, as well as of the penalty, but the Secretary in oral argument supported the Tenants' Association's request to collect rent and pay the utilities and ordinary expenses until the Receiver could begin. We must first note that 10 V.S.A.  8013(d) automatically stays the payment of a penalty once an appeal to the Supreme Court is filed. Presumably it was the prospect of the stay pending appeal which prompted LCHDC to request the amendment. Because of the possibility that the full funding of the escrow account may be suspended pending an appeal, unless the Supreme Court issues an order under V.R.A.P. 8, this Court will not entirely postpone the Receivership until the escrow is fully funded. The work required by the Order (at least the work of monitoring the water supply and paying the utilities) must go on whether or not an appeal is filed. However, the Court is also mindful that the Receiver has no responsibility to provide any funds for the management of Respondents' property under the terms of the February 10, 1995 Order. (See, e.g., Paragraph F(6) "to the extent that funds are available in the escrow account . . ." Consequently, LCHDC's and the Tenants' motion to amend what is essentially Paragraph F of the Order is GRANTED IN PART and DENIED IN PART, and Paragraph F is hereby amended as follows: F. (former D) The Court, having found that Respondents failed to comply with the Emergency Order issued in the present case on August 2, 1993 (FN2), despite their having entered into it by stipulation, hereby appoints the Lake Champlain Housing Development Corporation as Receiver under V.R.C.P. 70 with authority until further order of the Court. Subparagraph (1) and the first sentence of subparagraph (3) shall not take effect until at least $15,000 has been placed in the escrow account pursuant to the Court's Order dated April 4, 1995. Until such time, the tenants shall continue to pay rent to the escrow fund that they manage and which is referred to in the second sentence of subparagraph (3), and until such time the Tenants' Association may pay from the tenants' escrow fund the utility payments as provided in subparagraph 6(d) below and any other necessary expenses as provided in subparagraph 6 below on behalf of the tenants. The Receiver: (1) shall notify the mobile home tenants that it has been appointed and is authorized by the Court to collect their rental payments on behalf of Respondents; (2) shall establish an escrow account for the funds to be managed by the Receiver under this Order, including the penalty imposed under paragraph N of this Order; (3) shall establish rental amounts in conformance with the rental housing laws of the state of Vermont, and shall collect from the mobile home tenants and deposit into the escrow account on behalf of Respondents all present and future rental payments. Nothing in this subparagraph prevents the members of the GTA from retaining and managing the escrow fund previously established by agreement with Respondents to cover some of GTA's expert witnesses; (4) shall manage and operate the mobile homes on Respondents' property, and the water system on Respondents' property, to the extent that funds are available in the escrow account, in conformance with this Order to assure the health, safety and welfare of the residents and of the environment, and to employ persons, maintain or obtain insurance, and do other acts as reasonable and necessary to carry out its responsibilities; (5) may enter upon Respondents' property between the hours of 9:00 a.m. and 9:00 p.m. upon 24 hours oral or written notice to Respondents and to any affected resident, except that in the event of imminent danger to any person or property entry is allowed at any necessary hour and without prior notice. Within 24 hours after such emergency entry, the Receiver shall file a written explanation of the emergency entry with the Court, with copies to the Town Health Officer, to Respondents and to any affected resident; (6) may pay from the escrow account, in the following order of priority, and to the extent that funds are available in the escrow account, (a) the reasonable and necessary actual costs of the Receiver's management of Respondents' property, including any liability insurance beyond its existing liability insurance necessary to be held by the Receiver on account of this project; (b) reasonable and necessary repairs to and maintenance of the water supply system serving Respondents' property; (c) the erection and maintenance of reasonable and necessary fencing around areas of surfacing sewage; (d) utility services for the mobile home tenants, unless any such tenant pays his or her utility services directly; (e) reasonable and necessary repairs to any maintenance of the wastewater disposal systems serving the mobile homes, which may include any reasonable and necessary pumping and hauling of sewage from septic systems serving the mobile homes to an approved disposal facility; (f) the reasonable and necessary operation and maintenance of the mobile home lots and services to those lots on Respondents' property. Of course, if an appeal is filed and the penalty is stayed, any of the parties may apply to the Supreme Court for an order in the nature of injunctive relief pending the appeal, including orders relating to the funding of the escrow account and relating to proposals to undertake any work in lieu of the Receiver during that period. V.R.A.P. 8. Respondents' Motions as to Mobile Home Park Issues Respondents concede that they are subject to the Mobile Home Park statute and its regulations, and their proposed order includes a provision that they apply for a Mobile Home Park permit, as well as including paragraphs similar to paragraphs C and J of the February 10, 1995 Order. In order to assure that all portions of the February 10, 1995 Order take effect except those specifically affected by today's order, we will also include in today's order an order pursuant to V.R.C.P. 54(b) making clear which portions of the February 10, 1995 order are final. Respondents' motion to amend the Order by adding a requirement that they apply for a mobile home park permit, and to accept portions of Paragraph C and to amend what is essentially Paragraphs J of the Order are GRANTED. A new subparagraph (1) is added to Paragraph A of the February 10, 1995 Order as follows: [A.](1) Respondents shall file an application for a Mobile Home Park permit, pursuant to 10 V.S.A. Chapter 153 (Mobile Home Parks) and the Environmental Protection rules, Chapter 6 (Mobile Home Parks) within 30 days of the April 4, 1995 Order. Paragraph J is hereby amended as follows: J. (former R) Until at least $15,000 has been placed in the escrow account pursuant to the Court's Order dated April 4, 1995, Respondents shall sample monthly for total coliform bacteria and for nitrates, according to the Agency-approved sampling, testing, care of samples and analysis procedures, and shall have the samples analyzed at an Agency-approved laboratory, and shall submit the results to the Water Supply Division of the Agency within two weeks of the date of sampling. On or before April 25, 1995 Respondents shall submit a sampling plan and the procedures they plan to follow to the Water Supply Division of the Agency for approval. The Agency may designate a different Division or person to receive these samples by so informing Respondents' attorney in writing. After at least $15,000 has been placed in the escrow account pursuant to the April 4, 1995 Order, the Receiver shall perform or arrange for the continued performance of the sampling required by this paragraph. Respondents' Motions Regarding Penalty Issues Respondents have also made several motions regarding the penalty amount. Respondents move to correct a computational error in the February 10, 1995 Order and, based on the correction of the monthly lot rent for the lots in the cluster, Respondents move for the recomputation of the penalty. Those two motions for recomputation are GRANTED. Upon recomputing, we conclude that the penalty is $82,663. Respondents also moved for a partial new trial to show that there were fewer units during the four months of November and December of 1994 and January and February of 1995, but have not presented the proposed evidence in any affidavit. See Respondents' memorandum at footnote 8 and accompanying text. It is premature and unnecessary to consider taking additional evidence on this issue unless the facts are contested. Therefore, this motion is DENIED WITHOUT PREJUDICE to Respondents' filing a motion for further correction of the penalty amount with affidavits as to the dates of departure of any of the tenants during that time period. Only if those facts are contested would we consider taking any evidence on that point. As this element of the penalty was based on facts which Respondents could not have contested at the trial, it is fair for them to present such facts through a motion to amend the decision. Respondents also move to reconsider any enhancement of the penalty due to Respondents' purported violation of an emergency order issued in January 1994 regarding the placement of a second mobile home on a lot which Respondent Leo Henry owns with his sister Theresa McCormick. However, the Court did not enhance the penalty regarding that emergency order. Rather, in the February 10, 1995 Decision and Order, the Court found, on page 14, that [n]o evidence was presented that Respondents had a history of any other violations prior to the issuance of the first Administrative Order in this matter. On January 14, 1994, this Court issued an Emergency Order requiring Respondent to remove a second mobile home which had been placed in November 1993, on a one-half acre parcel of land he owned in Alburg Springs, without an Act 250 permit or a water supply and wastewater disposal permit. No evidence was presented that Respondent failed to comply with that Emergency Order. (Emphasis added.) As the Court did not consider the Alburg Springs order in assessing the penalty in the present case, Respondents' motion for new trial on facts related to it is DENIED. Respondents also move for a new trial to present additional evidence of their expenses during the period for which the penalty was calculated. However, they do not allege that any of this evidence is newly discovered. As it was available to them during the trial and does not involve a jurisdictional issue, their failure to present it then does not justify reopening the evidence now. The exclusion of the engineering fees was fully considered in the original order and Respondents' have not persuaded the Court to reconsider that issue. Respondents' motion for retrial of the factual basis for the penalty calculation is DENIED. Respondents also ask the Court to stay the imposition of the penalty pending resolution of the jurisdictional questions regarding the Public Water Supply and Act 250 jurisdictional issues. However, the penalty as calculated in the February 10, 1995 Order would have been imposed in the same amount based on the Mobile Home Park violation alone. The economic benefit amount was enhanced by the need for deterrence due to Respondents' failure to comply with the stipulated emergency order entered into in this case in August of 1993, and by the duration of the violation, which was longest for the mobile home park violation. The economic benefit was received by Respondents from renting out mobile home lots or mobile homes without having obtained a prior permit to do so. Because the penalty amount is unchanged by whether the Public Water Supply and Act 250 programs were also violated, Respondents' motion to stay the imposition of the penalty pending resolution of those issues is DENIED. Respondents' Motions as to Public Water System issues Respondents move for a partial retrial of the jurisdictional facts on which the Court based its conclusion that Respondents operated a water system or combination of water systems owned or controlled by them with at least 10 service connections or serving an average of at least 25 people, bringing their activities within the Public Water Supply program. Even with the facts as described in the various affidavits, we would still conclude that Respondents controlled and operated a combination of water systems which served the jurisdictional number of persons or connections. In any event, as the penalty would not be changed even if there were no Public Water System violation, the only remaining question is whether the water supply as it is now configured has fallen below the jurisdictional requirements. Unlike Act 250 jurisdiction, if a water supply system is reduced in size or scope it may be removed from jurisdiction. The February 10, 1995 Order left Respondents free to apply to the Water Supply Division of the Agency for a current jurisdictional ruling. Accordingly, Respondents' motion for a new trial on water system jurisdictional issues is DENIED. However, to clarify the relative timing of such an application, the Court hereby amends Paragraph K of the Order adding a subparagraph K(1) as follows: [K](1) Respondents may at any time apply to the Water Supply Division of the Agency for a current jurisdictional ruling on whether the water systems as currently configured fall within the Public Water Supply program and may apply to this Court for an amendment to this Order (or to the Supreme Court under V.R.A.P. 8, if this matter is on appeal) postponing the implementation of Paragraph K of this Order pending such jurisdictional determination. Respondents' Motions Regarding Act 250 Jurisdictional Issues Respondents also move for a partial retrial of the jurisdictional facts on which the Court based its conclusion that Respondents came within Act 250. Although the penalty would not be changed even if there were no Act 250 violation, the Court's finding of Act 250 jurisdiction has future consequences for Respondents' use of their property. Because the matter is jurisdictional, even though the evidence may have been available to Respondents before, it is necessary to determine whether the Court was actually without jurisdiction to act on the Act 250 issues. Accordingly, Respondents' Motion for New Trial on Act 250 jurisdictional issues is GRANTED and Paragraph M of the February 10, 1995 Order is hereby stayed pending a final order on those issues. The parties are advised that this hearing will reopen not only the three grounds for Act 250 jurisdiction presented in the prior hearing, but also any other grounds for Act 250 jurisdiction, including whether under Environmental Board Rule 2(b) Respondents subdivided ten parcels within five years, whether by sale or lease or some combination of the two. Respondents' Motion to Sell Portions of their Property and to Postpone Payment of the Penalty Respondents also moved for permission to sell three parcels of their property: 1) a parcel of 10+ acres to Barratt/Comstock consisting of their present mobile home lot and land to their and the Benjamins' east; 2) an approximately 63 acre parcel of the most westerly of the Henry land to the west of the pond, and 3) a separate parcel of 40.951 acres south of the Krone parcel on Greenwoods Road. Permission is GRANTED to sell the 40.651 acre parcel, as it was received by Respondents as a separate parcel, does not adjoin Respondents' other land, and the Secretary has not shown it to have merged with any of Respondents' other property. It may be transferred as a separate parcel without Act 250 jurisdiction attaching, even if the rest of Respondents' property turns out to be subject to Act 250. Permission to sell the other two parcels is DENIED WITHOUT PREJUDICE to refiling the request when the boundaries of the proposed sales are more clearly defined. Any such future request should include proposed language in the deeds to address the problem of the purchasers' understanding that the land may be or become subject to requirements of Act 250, and should address the primary jurisdiction of the District Commission to rule on such a request. Respondents' motion requested, through Respondent Leo Henry's affidavit, to postpone the date for payment of the penalty to allow time for a closing to occur from a property sale. That motion is DENIED as to $15,000 of the penalty, which shall be paid on or before May 15, 1995 into the escrow fund as provided in the February 10, 1995 Order; and that motion is GRANTED as to the remainder of the penalty, which shall be paid into the escrow fund on or before August 31, 1995 or within one week after a closing on any sale permitted by the Court, whichever occurs first. Rule 54(b) Order In order to assure that all portions of the February 10, 1995 Order take effect except those specifically affected by today's order, we hereby find that there is no just reason for delay and hereby enter final judgment pursuant to V.R.C.P. 54(b) that all portions of the February 10, 1995 Order (as amended today) are final, except for Paragraph M of the Order, the following "Conclusion of Violation" relating to Act 250 found at page 16 of the Order, the factual findings which supported this conclusion: By installing, constructing or maintaining at least ten housing units on Respondents' property after June 1, 1970, by constructing improvements of over 800 feet for roads incidental to the lease of lots, and by constructing improvements on roads providing access to more than five lots, Respondents have violated 10 V.S.A.  6081(a) (Act 250). The Act 250 violation began on July 24, 1991 and continues to the present. This V.R.C.P. 54(b) ruling allows most of the order to take effect or to be appealed, while the Act 250 jurisdictional issue continues to be litigated. Scheduling Order On Friday, April 21, 1995 the Court will hold a pre-hearing conference by telephone, at a time to be scheduled, to establish the time required for the hearing on the Act 250 jurisdictional issues and whether any of the evidence can be submitted as agreed facts. The Court intends to accept as much direct testimony as possible in the written form of the affidavits, with the affiants present in court to be cross examined and to give any additional direct testimony. If Respondents wish to request that any cross examination of the elder Mr. Henry take place by deposition or written affidavit, they shall make any such request in writing on or before Monday, April 17, 1995, so as to allow the Secretary to respond to such request and the Court to rule at the April 21 conference. On or before April 19, the Receiver and the Tenants' Association shall notify the Clerk of the Court whether they will be participating in the conference and whether they intend to participate in the evidentiary hearing on the Act 250 jurisdictional issues. The Court expects the hearing to be scheduled in the week of May 15 or May 22 at the Franklin Superior Court. Done at Montpelier, Vermont, this 4th day of April, 1995. ____________________________ Merideth Wright Environmental Judge FN1. Amended portions are shown in bold. FN2. Please note that this is not the Emergency Order involving the McCormick/Henry property in Alburg Springs which was Docket No. E94-030 and was not considered as enhancing the penalty in the present case.