               STATE OF VERMONT

             ENVIRONMENTAL COURT

Secretary, Vermont
Agency of Natural
Resources, Plaintiff,   }   Docket No. 41-2-02
                        }   Vtec
v.                      }
                        }   (Stage II Vapor
Mountain Valley         }   Recovery)
Marketing, Inc., ,
Respondents



Secretary, Vermont
Agency of Natural
                        }   Docket No. 278-12-02
Resources, Plaintiff,
                        }   Vtec
                        }
v.
                        }    (Stage II Vapor
                        }   Recovery)
Premium Petroleum,
Inc., Respondents



Secretary, Vermont
Agency of Natural
Resources, Plaintiff,
                        }   Docket No. 176-8-02
v.                      }   Vtec
                        }
Premium Petroleum, Inc, }    (Stage I Vapor
Odessa Corp.,           }   Recovery)
Timberlake Associates,
and Wesco, Inc.,
Respondents



Secretary, Vermont          Docket No. 175-8-02
                        }
Agency of Natural           Vtec
                        }
Resources, Plaintiff,
                        }
                            (Hazardous Waste
                                   }   Management
         v.                        }   Regulations)

         Premium Petroleum, Inc,
         Odessa Corp.,
         Timberlake Associates,
         and Wesco, Inc.,
         Respondents

Decision and Order on Motions for Summary Judgment - Constitutional
                              Grounds

In Docket No. 41-2-02 Vtec on January 24, 2002, the Secretary of the
Vermont Agency of Natural Resources (ANR) issued an administrative
order pursuant to 10 V.S.A. ' 8008 regarding Respondent Mountain
Valley Marketing, Inc., which timely requested a hearing in
Environmental Court. This administrative order alleged violations of
the Air Pollution Control Regulations regarding Stage II Vapor
Recovery. In Docket No. 278-12-02 Vtec on November 26, 2002, the
Secretary of the Vermont Agency of Natural Resources (ANR) issued
another administrative order pursuant to 10 V.S.A. ' 8008 also alleging
violations of the Stage II Vapor Recovery Regulations regarding
Respondent Premium Petroleum, Inc., which also timely requested a
hearing in Environmental Court.

In Docket No. 176-8-02 Vtec, on July 31, 2002 the Secretary of the
Vermont Agency of Natural Resources (ANR) issued an administrative
order pursuant to 10 V.S.A. ' 8008 regarding Respondents Premium
Petroleum, Inc, Odessa Corp., Timberlake Associates, and Wesco, Inc.,
which timely requested a hearing in Environmental Court. This
administrative order alleged violations of the Air Pollution Control
Regulations regarding Stage I Vapor Recovery.

In Docket No. 175-8-02 Vtec, on July 31, 2002 the Secretary of the
Vermont Agency of Natural Resources (ANR) issued an administrative
order pursuant to 10 V.S.A. ' 8008 regarding Respondents Premium
Petroleum, Inc, Odessa Corp., Timberlake Associates, and Wesco, Inc.,
which timely requested a hearing in Environmental Court. This
administrative order alleged violations of the Hazardous Waste
Management Regulations regarding exempt and small-quantity
generators of hazardous waste.

In all the above-captioned cases, all Respondents (which are all
related corporations or entities) are represented by Jon Anderson,
Esq., William E. Simendinger, Esq. and Kathryn Sarvak; and the
Agency of Natural Resources is represented by Catherine Gjessing,
Esq.

Applicability of Summary Judgment procedure

The Secretary first argues that V.R.C.P. 56, providing for summary
judgment, does not apply to proceedings under 10 V.S.A. Chapter
201. V.R.C.P. 76(a)(3). The Secretary is correct that V.R.C.P. 56
summary judgment does not apply, but the Court may provide for the
A disposition of legal issues prior to the hearing@ as it has done in
these cases, by allowing the filing of memoranda analogous to motions
for summary judgment. V.R.C.P. 76(d)(3)(D).

Nondelegation Doctrine

Respondents argue that they are entitled to judgment as a matter of
law because all the regulations under which the above-captioned
administrative orders were issued were adopted under statutes that
violate the doctrine of separation of powers between the legislative
and the executive branches of government, in that the statutes
delegate legislative power to the Agency of Natural Resources without
adequate standards to guide its use, and also violate the constitutional
principles of due process and equal protection.

First it is necessary to point out that administrative agencies such as
the Agency of Natural Resources carry out at least two distinct
functions in our modern system of government: rulemaking functions
and adjudicative functions. The function challenged in the present
cases is the rulemaking or quasi-legislative function. The function
challenged in several of the cases relied upon by Respondents, notably
In re Handy, 171 Vt. 336 (2000), is the adjudicative or quasi-judicial
function.

The adjudicative function, whether exercised by a court, an
administrative tribunal, a municipal zoning board, or, as in Handy, the
legislative body of the town considering a permit application in place of
the zoning board, must be exercised based on objective standards,
whether found in regulations or in state statute or local ordinance,
simply to avoid the arbitrary exercise of the adjudicator= s discretion.
In Handy, the zoning enabling statute and the particular municipality=
s zoning ordinance presented the necessary objective standards for a
zoning board (or the court in a de novo appeal) properly to adjudicate
whether a particular permit applicant should be granted a permit.
However, during the period during which a new zoning regulation had
been proposed but was not yet effective, the zoning enabling statute
transferred the permit-issuing authority to the selectboard, but without
any objective standards at all (that is, without directing the
selectboard to apply the old zoning ordinance, to apply the proposed
ordinance amendment, or to apply the standards for approval of a
conditional use.) It was the state statute that was held to be
unconstitutional in Handy, for its complete lack of guiding standards;
that statute was later amended to correct the problem by requiring the
use of the proposed ordinance amendment as of the date on which the
proposed ordinance amendment was noticed for public hearing. 24
V.S.A. ' 4443(d) (as amended).

By contrast, in the present cases Respondents do not challenge
whether the regulations adopted by the Agency of Natural Resources
provide sufficient objective standards for an adjudicative decision to be
made about Respondents= behavior under those regulations. Rather,
Respondents argue that the enabling statutes do not provide sufficient
guidance to the Agency for it properly to have produced those
objective standards in the regulations.

Other than two cases1 decided by the United States Supreme Court in
1935, in the context of extensive government intervention in the
economy during the Great Depression, the U.S. Supreme Court has
not invalidated statutory delegations of rulemaking power to
administrative agencies, and, indeed, has overturned lower federal
court decisions which had attempted to follow those two cases2.

Rather, the U.S. Supreme Court has consistently applied the test of
whether the enabling statute sets out an A intelligible principle@ to
guide the exercise of administrative rulemaking authority. See
discussion of the history of this test in Whitman v. American Trucking
Assns., Inc., 531 U.S. 457, 472-476 (2001); and in Richard J. Pierce,
Jr. Administrative Law Treatise3, ' 2.6 at pp. 86-107 (2002). The Court
has A almost never felt qualified to second-guess [the legislature]
regarding the permissible degree of policy judgment that can be left to
those executing or applying the law.@ Whitman, 531 U.S. at 474-75,
quoting Justice Scalia= s dissent in Mistretta v. United States, 488 U.S.
361, 416 (1989). In the Whitman case, the Court found the scope of
discretion allowed to the federal Environmental Protection Agency by '
109(b)(1) of the federal Clean Air Act to be A well within the outer
limits of our nondelegation precedents.@ Whitman at 474.
Section 109(b)(1) of the federal Clean Air Act required the federal EPA
to set ambient air quality standards which, A in the judgment of the
Administrator,@ based on criteria documents required under ' 108 and
A allowing an adequate margin of safety,@ are A requisite to protect
the public health.@

The Court in Whitman noted (at p. 475) that the greater the power
conferred on the agency, the more restrictive the acceptable degree of
agency discretion, but that even in > sweeping regulatory schemes=
the statute is not required to define how much of the regulated harm
is too much. That is, the statute is not required to state how >
imminent= is too imminent, or how > necessary= is sufficiently
necessary, or how > hazardous= is too hazardous, or, as in Whitman,
what is the > requisite= level is, that is, neither too high nor too low, to
protect the public health with an adequate margin of safety.

In Vermont, equally, the legislature must avoid unconstitutional
delegations of legislative authority to administrative agencies. Vincent
v. Vermont State Retirement Board, 148 Vt. 531, 535 (1987). The
Vermont Supreme Court in that case noted that the A enabling
legislation of virtually every administrative agency must include a
certain degree of discretion given to the administrative agency to deal
with issues unforeseen by its creators@ and that A such discretion
may be delegated by the legislature, but that it A must not be >
unrestrained and arbitrary.= @ [Citations omitted.] The Court required
that A the entire statute must be examined to determine whether the
discretion afforded an administrative agency is sufficiently defined so
as to warrant noninterference by this Court.@ Id.,148 Vt. at 535.

Air Pollution Control Regulations - Stage II and Stage I Vapor Recovery

Both the Stage I and Stage II Vapor Recovery regulations were
adopted by the Vermont Agency of Natural Resources pursuant to
Vermont= s Air Pollution Control Act, 10 V.S.A. Chapter 23, and in
particular its ' 558. The Stage I Vapor Recovery regulations regulate
the recapture of vapors from in-ground gasoline storage tanks when
those tanks are refilled from bulk tanker trucks. The Stage II Vapor
Recovery regulations regulate the recapture of vapors from individual
vehicle gasoline tanks into those in-ground gasoline storage tanks
when the individual vehicles are refueled. Both regulations are
emission control requirements; that is, even though they do not set a
numerical level for acceptable levels of emissions, they do operate to
regulate the release into the outdoor atmosphere of gasoline vapor,
which in turn falls within the definition of > air contaminant.= 10 V.S.A
' ' 552(2) and (5).

Section 558 provides in full that:

The secretary may establish such emission control requirements, by
rule, as in his judgment may be necessary to prevent, abate, or
control air pollution. The requirements may be for the state as a whole
or may vary from area to area, as may be appropriate to facilitate
accomplishment of the purposes of this chapter, and in order to take
necessary or desirable account of varying local conditions.

The legislature= s A declaration of policy and purpose@ regarding
Vermont= s Air Pollution Control Act further provides in ' 551(a) that it
is the A public policy of this state and the purpose of this chapter to
achieve and maintain such levels of air quality as will protect human
health and safety, and to the greatest degree practicable, prevent
injury to plant and animal life and property, foster the comfort and
convenience of the people, promote the economic and social
development of this state and facilitate the enjoyment of the natural
attractions of this state.@ Section 558 alone states a sufficiently
intelligible principle: that the Secretary is to promulgate regulations
setting emission control requirements which will have the result of
preventing, abating, or controlling air pollution. When the statute is
read as a whole, that is, when ' 551(a) is applied to it, the statute
provides an > intelligible principle= to guide the Agency= s discretion
sufficient to uphold the statute against challenge on the basis of the
nondelegation doctrine and the constitutional principles of due process
and equal protection.

Hazardous Waste Management Regulations

Vermont= s Hazardous Waste Management Regulations were adopted
under the authority of the state= s Waste Management Act, described
as follows by the Vermont Supreme Court in State of Vermont v. Ben-
Mont Corporation, 163 Vt 53, 57-58 (1994):

Vermont= s Waste Management Act, 10 V.S.A. chapter 159, was
enacted to address the increasingly complex social, economic and legal
problems of managing solid and hazardous wastes. 10 V.S.A. ' 6601 ;
see also Note, Solid Waste Source Reduction and the Product Ban: A
Commerce Clause Violation?, 13 Vt. L. Rev. 691, 696-98 (1989)
(describing history of Vermont= s solid waste management legislation).
Chapter 159 was modeled after and enacted to comply with the
Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. ' '
6901-6991, chapter 82 (Solid Waste Disposal). See Note, supra, at
696 (discussing enactment of chapter 159 in response to RCRA). Like
RCRA, chapter 159 outlines a comprehensive cradle-to-grave scheme
for managing the generation, treatment, storage, transportation and
disposal of waste. See United States v. Johnson & Towers. Inc., 741
F.2d 662, 666 (3d Cir. 1984) (describing scope and purpose of RCRA).
Both RCRA and chapter 159 rely heavily on environmental agencies to
implement their statutory goals. Compare 10 V.S.A. ' 6603(1)
(secretary has authority to promulgate rules to implement purpose of
statute) with 42 U.S.C. ' 6907 (same); and 10 V.S.A. ' 6610 (secretary
of agency authorized to enforce compliance) with 42 U.S.C. ' 6928 (a)
(same).

Respondents argue that the Vermont Waste Management Act only
allows the Agency to impose the requirements of Subchapter 7 of the
Hazardous Waste Management Regulations by way of issuing a permit
under 10 V.S.A. ' 6606; that the Agency cannot impose those
regulations on a generator of hazardous waste exempt from the
requirements of obtaining a ' 6606 permit; and that the legislature has
established no standards for the enactment of the Subchapter 7 rules.

Section 6604(a) requires the Secretary of the Agency of Natural
Resources to adopt a comprehensive solid waste management plan for
the state. With respect to the subset of solid waste that is hazardous, '
6604(b) provides additional specific authority for the Secretary to:

manage the hazardous wastes generated, transported, treated, stored
or disposed in the state by administering a regulatory and
management program which, at a minimum, meets the requirements
of subtitle C of the Resource Conservation and Recovery Act of 1976,
and amendments thereto, codified as 42 U.S.C. chapter 82,
subchapter 3, and the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

By authorizing Vermont=s Agency of Natural Resources to manage
hazardous wastes through a Aregulatory@ program, this section
authorizes it to adopt regulations. Further, by adopting by reference
the regulatory requirements of two specific federal laws, ' 6604(b)
provides ample authority and a specific intelligible principle to guide
the Agency= s rulemaking process. The Vermont legislature specifically
directed the Agency of Natural Resources to adopt regulations to
create a program which at a minimum was consistent with subtitle C of
RCRA (dealing with hazardous waste management) and with CRCLA. It
did so to ensure that Vermont could operate its regulatory program
within the state and avoid the preemption of that program by the
federal Environmental Protection Agency. See Note, supra, 13 Vt. L.
Rev. 691(1989). The provisions of Subchapter C of RCRA, 42 U.S.C. ' '
3001 et seq., and in particular the provisions of ' 3001(d), provide
specific guidance for the Vermont Agency=s adoption of the
Subchapter 7 Waste Management Regulations at issue in the present
case.

Accordingly, based on the foregoing, it is hereby ORDERED and
ADJUDGED that Respondents= motions for judgment as a matter of
law on constitutional issues are DENIED. We will hold a further
telephone conference under V.R.C.P. 76(d)(3)(D) on July 23, 2003 to
discuss whether and when these matters may be set for trial. (Please
see enclosed conference notice and two other orders issued this date
in the above-captioned cases.)

Done at Barre, Vermont, this 7th day of July, 2003.




___________________
Merideth Wright
Environmental Judge



                                      Footnotes



1.
    Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) and A.L.A. Schechter Poultry
Corp., 295 U.S. 495 (1935); see discussion in Richard J. Pierce, Jr. Administrative Law
Treatise, §2.6 at pp. 91-92 (2002).



2.
   See, e.g., Fahey v. Mallonee, 332 U.S. 245 (1947), discussed in Richard J. Pierce, Jr.
Administrative Law Treatise, §2.6 at p. 93 (2002).
3.
    This current treatise is by the same commentator who wrote the 1985 article cited by
Respondents. The treatise describes the current status of the field of administrative law,
while the 1985 article proposed an alternative theory to apply to the nondelegation
problem: judicial deference to increased Presidential control of agency policy-making, to
insure that policy-making power be vested in an elected official. This is an interesting
theory, but does not describe the current state of either federal or Vermont administrative
law some seventeen years after it was written.
