In re DJK

• Decision Date: 14 June 2024
• Citation: 323 A.3d 911
• Docket Number: No. 22-AP-296
• Parties: IN RE DJK, LLC WW & WS PERMIT (Ralph Crowley and Joanne Crowley, Appellants)
• Court: Vermont Supreme Court

323 A.3d 911

2024 VT 34

IN RE DJK, LLC WW & WS PERMIT

(Ralph Crowley and Joanne Crowley, Appellants)

No. 22-AP-296

Supreme Court of Vermont.

June Term, 2023

June 14, 2024

On Appeal from Superior Court, Environmental Division, Thomas G. Walsh, J.

Jeremy S. Grant, Gary L. Franklin, and Jon Anderson of Primmer Piper Eggleston & Cramer, PC, Burlington, for Appellants.

Justin A. Brown, Nathan H. Stearns, and Matthew J. Greer of Sheehey Furlong & Behm P.C., Burlington, for Appellee DJK, LLC.

Charity R. Clark, Attorney General, and Melanie Kehne, Assistant Attorney General, Montpelier, for Appellee State of Vermont, Agency of Natural Resources.

PRESENT: Reiber, C.J., Eaton, Carroll, Cohen and Waples, JJ.

CARROLL, J.

¶ 1. Neighbors Ralph and Joanne Crowley appeal from the Environmental Division’s summary judgment decision in favor of applicant DJK, LLC. We affirm.

I. Procedural History

A. Background

¶ 2. The following facts are undisputed. DJK owns real property in Manchester, Vermont. In March 2021, it sought a Wastewater System and Potable Water Supply Permit from the Department of Environmental Conservation (DEC). DJK proposed to construct a wastewater system to serve an additional bedroom in an existing residence and a single bedroom in a detached accessory unit.

¶ 3. The Wastewater and Potable Water Supply Rules require that wastewater sys- tems and potable water supplies, such as a well, be located a sufficient distance apart to protect public health and prevent groundwater contamination. See generally 10 V.S.A. § 1390(4), (5) (declaring as State policy "that the groundwater resources of the State are held in trust for the public" and that State’s "groundwater resources … shall be managed to minimize the risks of groundwater quality deterioration by regulating human activities that present risks to the use of groundwater in the vicinities of such activities"). To this end, the rules create a "presumptive isolation zone" around potable water supplies and septic systems. A "Wastewater System Presumptive Isolation Zone" is defined as "an area delineated around leachfields, replacement areas, and wastewater tanks in which a potable water source with a design rate of less than or equal to 2.0 gallons per minute, assuming it would be located in bedrock or confined surficial aquifer, is presumed to be unable to be located." Wastewater System and Potable Water Supply Rule § 1-201(103), Code of Vt. Rules 12 033 001 [hereinafter Rule 0.001], http://www.lexisnexis.com/hottopics/codeofvtrules (providing that presumptive isolation zone "takes the size and shape identified in § l-913(a)").

¶ 4. To qualify for a wastewater permit, an applicant must demonstrate, among other things, that the proposed location of its wastewater system does not contain any potable water supplies within its associated isolation zone. See Rule 0.001 §§ 1-301, 305. The rules contain an essentially reciprocal isolation zone for the construction of a potable water supply. Rule 0.001 § 1-1105(a) ("A presumptive isolation zone shall be identified, using the methods identified in § 1-912, around proposed potable water sources in which a leachfield with a design flow of less than 2000 gallons per day is presumed to be unable to be located."). The rules allow isolation distances to be reduced under certain circumstances. See Rule 0.001 § l-912(e) (wastewater) ("An applicant or prospective applicant may submit a written request to the Secretary for a reduction in the required isolation distances or isolation zone for a particular feature of object."); Rule 0.001 § 1-1104(k) (similar provision concerning potable water supplies).

[1] ¶ 5. Under the "first in time" approach used in Vermont and most New England states, a wastewater or potable water supply permit "is issued to the person who first applies for a permit, even if the required isolation distances extend onto property not owned by the applicant." See "A Review of the ‘Overshadowing’ of Water Supply-Waste water System Isolation Distances," Report of the Technical Advisory Committee to the Vermont Legislature, at 1, 47-50, App. 8.4 (Jan. 15, 2010) [hereinafter TAC Report] (recognizing that Vermont, like most New England states, uses first-in-time approach to wastewater system and potable water supply permitting when first permit approves isolation zone overshadowing one or more neighboring properties), https://dec.vermont.gov/sites/dec/files/dwgwp/rotac/pdf/2011.01.15.tacovershadowingrep.pdf [https://perma.cc/5EFQ-4XBE]. This "approach has been used since the Agency of Natural Resources began issuing permits for water and wastewater systems starting in 1969." Id. at 1. At the request of the Legislature, the Technical Advisory Committee "examined alternative approaches," and "[a]fter considering the effect of these approaches," it "strongly recommend[ed] retaining the first-in-time approach." Id.

¶ 6. In this case, the presumptive isolation zone for DJK’s proposed wastewater system "overshadowed" neighboring property, including land owned by the Crowleys. The presumptive isolation zone cov ered approximately ten percent of the Crowleys’ lot. It was undisputed that the overshadowed portion of the Crowleys’ lot is currently undeveloped and does not contain a potable water supply. The Crowleys have an existing well/potable water supply, wastewater system, and residence outside of the presumptive isolation zone. They have no plans to install a potable water supply in this area; they did not apply for a permit or analyze if a reduction in the isolation zone could be obtained.

¶ 7. Because the presumptive isolation zone overshadowed the Crowleys’ property, DJK provided the Crowleys notice of the permit application by certified mail. See 10 V.S.A. § 1973(j)(1) (requiring applicant seeking potable water supply or wastewater permit to "send by certified mail, on a form provided by the Secretary [of ANR], a notice of an intent to file a permit application, including the site plan that accurately depicts all isolation distances, to any landowner affected by the proposed isolation distances at least seven calendar days prior to the date that the permit application is submitted to the Secretary"). The notice informed the Crowleys that they had the opportunity to discuss and potentially resolve conflicts before a permit was issued. It included a site plan depicting the proposed wastewater system with "presumptive isolation zones drawn around the proposed … septic system." The notice also stated, as required by DEC, that the Crowleys could "construct houses, garages, and driveways within the presumptive isolation zone" and that "[n]either the legislature nor the Rules authorize or require the [DEC] to deny a permit application when presumptive isolation zones extend onto [neighboring] property."

¶ 8. The Crowleys’ contractor asked DJK to alter the system design to remove the presumptive isolation zone from their property. The contractor presented potential design alternatives to the Crowleys but they did not respond.

¶ 9. In April 2021, the DEC granted a wastewater system and potable water supply permit to DJK. The permit includes a condition requiring adherence to the isolation distances set forth in the rules. See Rule 0.001 § 1-309(a) ("The Secretary may include any condition in a permit that he or she deems necessary to protect human health and the environment or to otherwise satisfy the purposes and requirements of these Rules, including requirements addressing operation and maintenance of a wastewater system or potable water supply."). Specifically, paragraph 2.3 of DJK’s permit provides:

No buildings, roads, water pipes, sewer services, earthwork, regrading, excavation, or other construction that might interfere with the operation of a waste-water system or a potable water supply are allowed on or near the site-specific wastewater system, wastewater replacement area, or potable water supply depicted on the stamped plans. Adherence to all isolation distances that are set forth in the Wastewater and Potable Water Supply Rules is required.

¶ 10. The Crowleys appealed the permit to the Environmental Division, which considered the matter de novo. The Crowleys argued that the permit was invalid because the State took their property via the presumptive isolation zone and they were denied an opportunity to be heard before the permit’s issuance. The Takings Clause of the Fifth Amendment states that "private property [shall not] be taken for public use, without just compensation." U.S. Const, amend. V. The Vermont Constitution similarly provides that "whenever any person’s property is taken for the use of the public, the owner ought to receive an equivalent in money." Vt. Const, ch. I, art. 2. "[V]irtually the same test" applies under both constitutions. Ondovchik Family Ltd. P’ship v. Agency of Transp., 2010 VT 35, ¶ 14, 187 Vt. 556, 996 A.2d 1179.

¶ 11. More specifically, in their third amended statement of questions, the Crowleys asked in relevant part if the permit language cited above:

state[s] a condition that is invalid because it seeks to impose an illegal easement on Crowley in violation of constitutional standards articulated by the Environmental Division in In re Umpire Mtn, LLC, WW and WS Permit Docket No. 171-12-12 Vtec (February 2014), as well as Dolan v. City of Tigard, 512 U.S. 374 [114 S.Ct. 2309, 129 L.Ed.2d 304] (1994), and Nob lan v. Calif. Coastal Commission, 483 U.S. 825 [107 S.Ct. 3141, 97 L.Ed.2d 677] (1987).

¶ 12. Neighbors’ substantive argument evolved over the course of the case. It shifted from an argument that a "land-use extraction" occurred under the Dolan/Nollan line of takings cases to an argument that the permit effectuated a "permanent physical invasion" of their property as in Cedar Point Nursery v. Hassid, 594 U.S. 139, 141 S.Ct. 2063, 210 L.Ed.2d 369 (2021).

¶ 13. DJK moved for summary judgment and alternatively, dismissal of the Crowleys’ appeal. The Crowleys opposed the motion and...