Appeal of Stratton Corp.

• Decision Date: 11 October 1991
• Docket Number: No. 90-278,90-278
• Citation: 157 Vt. 436,600 A.2d 297
• Parties: Appeal of STRATTON CORPORATION.
• Court: Vermont Supreme Court

Page 297

600 A.2d 297

157 Vt. 436

Appeal of STRATTON CORPORATION.

No. 90-278.

Supreme Court of Vermont.

Oct. 11, 1991.

Alan B. George of Carroll, George & Pratt, Rutland, for appellant.

Robert E. Woolmington of Witten, Saltonstall & Woolmington, P.C., Bennington, for appellees Stratton Area Citizens Committee and Uptegroves.

Jeffrey L. Amestoy, Atty. Gen., and William Griffin, Chief Asst. Atty. Gen., Montpelier, for appellee State.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

DOOLEY, Justice.

Appellant, the Stratton Corporation (Stratton), appeals the Windham Superior Court's dismissal of its challenge to a proposed rule of the Vermont Water Resources Board reclassifying a portion of Kidder Brook. We conclude that dismissal was proper and affirm.

On March 3, 1989, appellees William and Elizabeth Uptegrove and the Stratton Area Citizens Committee filed a petition with the Board, seeking reclassification of Kidder Brook, an upland stream located in the towns of Jamaica and Stratton, from Class B to Class A. On May 16, 1989, the Board initiated rulemaking proceedings, as required by the Vermont Water Pollution Control Act, 10 V.S.A. §§ 1250-1254. In accordance with the procedures for rulemaking set forth in the Vermont Administrative Procedure Act at 3 V.S.A. §§ 836-843, the Board published a proposed rule to reclassify the brook, held a public hearing on June 27, 1989, and set a July 6, 1989, deadline for public comment.

At the June 27 hearing, Stratton asserted that the Due Process Clause of the United States Constitution required the Board to conduct formal, trial-like proceedings rather than an informal rulemaking procedure. Stratton based this assertion on property rights in the land adjoining the brook and its plans for future development of the area. The Board rejected Stratton's due process argument and proceeded to hear testimony from proponents and opponents of reclassification, including representatives of Stratton. The Board extended the public comment period to July 20th to allow Stratton time to file additional written materials. On July 19, 1989, Stratton filed testimony of its consulting engineer detailing its permits and land development plans which would be threatened by the reclassification.

In all, Stratton presented approximately 125 pages of written testimony and supporting materials. It stated that it owned property on both sides of Kidder Brook and that it held six Act 250 land use permits involving these properties. According to Stratton, these permits would be subject to revocation or modification if the proposed reclassification were adopted. Further, Stratton had long-term plans for development in the Kidder Brook area. It was about to request an Act 250 permit to construct 498 homes and an 18-hole golf course in the area. Stratton claimed that these plans could be significantly affected or prevented by the reclassification.

On July 27th, the Board voted unanimously to proceed with adoption of the proposed rule to reclassify, and subsequently issued a written explanation and a denial of Stratton's request to reopen the proceedings. In response to Stratton's due process claim, the Board stated that it was "simply not convinced that reclassification of Kidder Brook to Class A [would] substantially affect any existing permit or development on lands owned by the Stratton Corporation." In support of this conclusion, the Board noted that Stratton's testimony, with one exception, showed only "generalized uneasiness" about the effect of the reclassification. The exception involved a contingency plan to build an on-site sewage disposal facility if its proposal to transfer wastewater to another area were not approved. The Board found this contingency need to be speculative. Overall, the Board found that "there [was] no material issue of fact in dispute among the parties to this proceeding."

Stratton appealed the reclassification to the Windham Superior Court, alleging that the Board's actions were arbitrary, unreasonable, and "contrary to law." In subsequent filings, as well as in its brief to this Court, Stratton clarified that its only claim on appeal was that the Board should have conducted "a trial-type hearing to adjudicate disputed facts" raised by the petition. On motion of the Board, appearing through the Attorney General, and the other appellees, the superior court dismissed Stratton's appeal, concluding that it was an attack on a rule which under the Administrative Procedure Act, 3 V.S.A. § 807, must be brought as an action for declaratory judgment in Washington Superior Court.

On appeal, Stratton argues that the court's jurisdictional decision was incorrect. Stratton further argues that even if the reclassification decision is rulemaking under the applicable statute, it can appeal the reclassification decision under 10 V.S.A. § 1270 and contest whether it was entitled to an adjudicative hearing as a matter of due process. The Attorney General, supported by the petitioners below, argues that reclassification is done by a rulemaking proceeding, 10 V.S.A. § 1253(c), and the exclusive method to challenge the validity of a rule is by declaratory judgment action in Washington Superior Court as provided in 3 V.S.A. § 807.

Ordinarily, we prefer to decide a jurisdictional issue rather than reach the merits. This case represents an exception to that preference for two reasons. First, while the parties have labeled the issue as jurisdictional, it is really one of venue. Since Stratton has limited its appeal solely to a question of law about the procedure used in reaching the reclassification decision, the issue in either proceeding would be the same. ^* In the Windham Superior Court, it would have to show that the Board acted "contrary to law." 10 V.S.A. § 1270. In the Washington Superior Court, it would need to show that the rule interferes with its "legal rights." 3 V.S.A. § 807. We fail to see any relevant difference in Stratton's burden. Under modern pleading and civil procedure rules, it is of no consequence that one proceeding is labeled an appeal and the other an action for a declaratory judgment. See V.R.C.P. 1, 2 (there is one form of action known as a "civil action" applicable in suits of a civil nature and appeals from agencies). The relief sought by Stratton in either proceeding would be the same.

Second, the jurisdictional and substantive issues are interrelated. Stratton argues that the Board's proceeding was not rulemaking because of limits imposed by the Due Process Clause of the Fourteenth Amendment, and that it had a right to appeal from what was actually adjudication. Because this issue could affect the proper method of resolving this dispute, we conclude that it is better to decide the underlying substantive issue to bring about an efficient and complete end to this litigation.

In evaluating the merits, we turn first to the statutory scheme around which this dispute revolves. The Vermont Water Pollution Control Act provides that the state's surface waters are classified as either Class A, B, or C. 10 V.S.A. § 1252(a). The system establishes water quality standards to meet federal law. See In re Town of Sherburne, 154 Vt. at 601, 581 A.2d at 277. The classifications relate to water quality and suitable uses. Class "A" waters are the highest quality, "(1) [s]uitable for public water supply with disinfection when necessary; character uniformly excellent; or (2) [h]igh quality waters which have significant ecological value." Class "B" waters are "[s]uitable for bathing and recreation, irrigation and agricultural uses; good fish habitat; good aesthetic value; acceptable for public water supply with filtration and disinfection." Class "C" waters are of lesser quality. 10 V.S.A. § 1252(a).

All waters located above 2500 feet altitude are designated Class A. 10 V.S.A. § 1253(a). All remaining waters, unless "otherwise classified by the [B]oard prior to July 1, 1971, are designated Class B waters." 10 V.S.A. § 1253(b). Hence, only those portions of Kidder Brook located below 2500 feet are at issue here.

Section 1253(c) provides that the Board

may on its own motion, and it shall upon petition by a state agency, a municipality or by thirty or more persons in interest alleging that it or they suffer injustice or inequity as a result of the classification of any waters, initiate a rulemaking proceeding to reclassify all or any portion of the affected waters in the public interest. In the course of this proceeding, the board shall comply with the provisions of [the Vermont Administrative Procedure Act], and hold a public hearing convenient to the waters in question. If the board finds that the established classification is contrary to the public interest and that reclassification is in the public interest, it shall file a final proposal of reclassification in accordance with 3 V.S.A. § 841. If the board finds that it is in the public interest to change the classification of any pond, lake or reservoir designated as Class A waters ..., it shall so advise and consult with the department of health and shall provide in its reclassification rule a reasonable period of time before the rule becomes effective. (Emphasis added.)

Subsection (f) provides that when the Board is considering reclassification to class A, "[n]otwithstanding the provisions of subsection (c)" the Board need only determine whether the reclassification is in the public interest. Subsection (e) sets forth ten factors for consideration in determining the public interest.

The statutory language makes clear that the Legislature intended that the reclassification process be "a rulemaking proceeding" and labeled a resulting reclassification decision a "rule." See In re Town of Sherburne, 154 Vt. at 599 n. 3, 581 A.2d at 276 n. 3. On its face, the statute declines to treat reclassification as a "contested case," subject to the formal, adjudicative provisions of the Vermont...