                                  STATE OF VERMONT

                                 ENVIRONMENTAL COURT

                                                }
Secretary,                                      }
Vermont Agency of Natural Resources,            }
                                                }
               v.                               }      Docket No. 131-7-98 Vtec
                                                }
Jeffrey Allen and Terry Allen,                  }
       Respondents.                             }
                                                }

                                  DECISION AND ORDER
      On July 13, 1998, the Secretary of the Vermont Agency of Natural Resources (ANR)
issued an administrative order pursuant to 10 V.S.A. '8008 regarding Respondents, who
timely requested a hearing in Environmental Court. Respondents represent themselves
through Respondent Terry Allen; and the Secretary of the Agency of Natural Resources is
represented by Catherine Gjessing, Esq.
      The Court extended the time for the hearing for good cause at the request of and by
agreement of the parties, to accommodate the schedules of the parties and to allow
discovery, and then again to allow the Respondents to apply for an exemption. The Court
also extended the time for the issuance of the decision for good cause. No environmental
harm resulted from the delay.
      The statutes, rules and permits applicable to this matter are 4 V.S.A. Chapter 27; 10
V.S.A. '1953 and 1954; 10 V.S.A. Chapter 201; and the Water Supply and Wastewater
Disposal Rules (Environmental Protection Rules, Chapter I, Subchapter 4). 10 V.S.A.
'8012(c)(2).


Findings
      Terry Allen and Jeffrey Allen are brothers. Jeffrey Allen is a recovering alcoholic
without a current driver=s license. On January 30, 1997, Terry Allen purchased the subject
property on AOld Route 7B@ in North Clarendon as a residence and home occupation
business for Jeffrey Allen, to enable Jeffrey Allen to become more self-supporting.
Respondents proposed for Jeffrey Allen to live in the residence and operate a home

                                            1
occupation business from an accessory building on the property. The property consists of
a .41-acre parcel of land improved with a single family residence and a barn-style
accessory or garage building located less than 100 feet from the residence. Adequate
potable water under pressure and adequate wastewater disposal to serve the residence is
provided in the residence.
       In April of 1989, the former owners had received Water Supply and Wastewater
Disposal Permit No. WW-1-0086 from the Agency of Natural Resources under the then-
Public Buildings rules to demolish a then-existing garage and to construct a new one to be
used for the former owners= furniture storage and retail sales business, apparently run as a
home occupation/commercial use, without the installation of a water supply or sewage
disposal connection. Condition #2 of that permit provides that A[t]he project is approved for
the new garage to be used for furniture storage and limited retail sales by family members
only. The[re] is no water and sewer connection planned for this new . . . building.@
Condition #1 required the project to be completed as described in the application; and
stated that any changes from the project as described in the application required Aprior
written approval@ from the Agency.
       In January of 1997, Jeffrey Allen telephoned the regional Permit Specialist, Rick
Oberkirch, to determine whether he needed any Act 250 or other permits to convert the
garage to a small general grocery store. Mr. Oberkirch filled out a project review sheet
based on the information provided by telephone. The description of the project appears on
the Project Review Sheet in full as follows:
       proposed change of use of previously permitted building, to be described as follows:
       proposed home-occupation (no employees outside of owner and immediate family)
       grocery store, pre-packaged foods (meat, sandwiches etc.) no raw produce, no
       exposed foods, construct water supply lines to sink fixtures, sewer lines to septic -
       family members only to use toilet in house - no public use

The Project Review Sheet as issued on January 20, 1997, stated that a Water Supply and
Wastewater Disposal permit or approval is required for the project as described.
Respondents do not appear to have sought to appeal or challenge the description of the
project on the project review sheet, either in January or when a copy was sent to them in
March attached to their town zoning permit. However, they maintain that they never
intended to put water supply or wastewater disposal facilities in the building.

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       On March 11, 1997, Respondents received a decision on their variance application
from the Town of Clarendon=s Zoning Board of Adjustment, allowing Jeffrey Allen to
conduct a retail convenience store as a home occupation/commercial use in the accessory
building. That decision stated that Respondent Awill use the existing septic and water
located on the property.@ The Zoning Permit issued effective April 17, 1997 based on that
ZBA decision noted that the project Arequires state water supply/wastewater review@ and
attached the January 1997 Project Review Sheet. Respondents did not apply for or
receive a Water Supply and Wastewater Disposal permit from the Agency before opening
for business on or about April 9, 1997. Coffee is prepared and sold on the premises; as all
other foods are sold already packaged and no other food is prepared or handled on the
premises. From April through June of 1997, members of the Agency=s regional office staff
discussed the matter with Respondents and their consulting engineer, considered and
refused a waiver of the permit requirement, and informed Respondent Jeffrey Allen that a
Water Supply and Wastewater Disposal permit would be required. Respondent Jeffrey
Allen maintained his belief that a permit was not or should not be required. A year later, in
July of 1998, the Administrative Order was issued.
       The violations asserted in the Administrative Order in this case are Respondents=
failure to obtain a Water Supply and Wastewater Disposal Permit under 10 V.S.A. '1953
and Respondents= violation of the Water Supply and Wastewater Disposal Rules
(Environmental Protection Rules, Chapter I, Subchapter 4) by their Afailure to install an
adequate supply of potable water in a grocery store.@ No specific violation was claimed
regarding Respondents= failure to install a toilet in the store.
Failure to obtain a permit in violation of 10 V.S.A. '1953
       Because a Water Supply and Wastewater Disposal Permit (WW-1-0086) was
issued for the accessory building, and under that permit Aprior written approval@ is required
for any changes to the use proposed in the original application, an amendment to Permit
No. WW-1-0086 was required prior to conversion of this building to a home occupation
general store.
       Respondents have no plans to construct or to physically modify either the existing
accessory building or the water supply or wastewater disposal system for the residence, or
to make a connection to the existing system of a new or modified structure. They have

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changed the contents of the building from one selling furniture to one selling packaged
groceries and coffee to go, as well as other non-food general store items. If it were not for
the existing permit under which the accessory building was built, it is by no means clear
from either the statute or the regulations that the Agency may regulate such a change in
use to a building, without any physical modification to the building or its water supply or
wastewater disposal system.
       The current statutory authority for the permitting program, 10 V.S.A. '1953(a),
provides in full that:
               A person shall not construct or modify an existing potable water supply or
       wastewater system or construct or modify a building or structure which requires
       construction or modification of a water supply or wastewater system or make
       connection to an existing potable water supply or wastewater system of a new or
       modified structure without first having obtained a permit from the secretary.
Based merely on the text of this section, it was not unreasonable for Respondents to
interpret this section as inapplicable to their change of use of the building. This definition
does not explicitly1 require that a permit be obtained for a change of use within a building
when no modifications are being made to the building or to its water supply or wastewater
system. While the Agency has consistently interpreted it to include such changes of use,
and courts should give great weight to an agency=s interpretation of the statute it is charged
with administering, the Agency did not present in evidence any written regulation or
regulatory policy or procedure which would have made such interpretation accessible to the
public. See 3 V.S.A. '831(b) and '806.
       The exemptions in '1954 exempt single-family residences from the permitting
requirement. Further, '1954(d) provides that a permit Ashall not be required@ for a change
of use A[w]hen a single family residence is used for both residential and commercial
purposes, and the commercial purposes entail the substantial presence of nonresidential
employees or regular visits by the public, but do not result in an increase in design flow or
potable water supply demands,@ provided that certain conditions are met regarding testing


   1
     The exemption provided in '1954(d) does suggest indirectly that a permit may be
required for a change of use.


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and that Athere has been no change to the residence, lot, potable water supply or
wastewater system in a manner so that the permitting requirements of section 1953 of this
title are triggered.@ It was not unreasonable for Respondents to interpret this section as
exempting them from the permitting requirement for their change of use of the building.
       The town=s zoning regulations appear to2 treat this property as a single family
residence with an accessory building used for a home occupation, that is, as a single family
residence used for both residential and commercial purposes. The Agency would have
treated the house=s septic system and water supply as sufficient to serve the store if a
covered walkway had been constructed between the house and the accessory building or if
they in some other way were attached. However, the Agency did not present in evidence
any written regulation or regulatory policy or procedure which would have made such
interpretation accessible to the public. Without such a physical connection, the Agency
treats the two buildings as separate for the purposes of water supply and wastewater
disposal, even though the distance between the store use and the house facilities remains
the same, and even if the particular town=s zoning regulations treat the store as a protected
home occupation in an accessory building. 24 V.S.A. '4406(3). Respondents argued that
this distinction was not a rational one; they did not request that the Agency make this policy
explicit or request a formal change in the policy. See 3 V.S.A. '831(b) and '806.
However, because Respondents are required to apply for a permit amendment due to the
terms of Permit No. WW-1-0086, we do not address the rationality of this distinction in the
present case.


Failure to install a water supply to a grocery store in violation of the Rules
       The Water Supply and Wastewater Disposal Rules apply only to the review of
projects subject to the permit requirements of 10 V.S.A. Chapter 61. Section 1-402 of the
Rules defines Abuildings under the jurisdiction of this subchapter@ as Athose buildings
defined in Title 10 V.S.A. '1953, as a structure used for human habitation or occupation

   2
     The zoning regulations are not before the Court; some towns allow a home
occupation in an accessory building and others do not. The town=s regulation of the
use is not in any way binding on the Agency; it is only relevant to the state of mind of
the Respondents.


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that requires a potable water supply and wastewater disposal facilities.@ However, the
quoted definition attributed to 10 V.S.A. '1953 is not in fact found in that statutory section;
it may have originated in a former definition of public buildings under 24 V.S.A. Chapter 24;
that chapter has since been repealed. Respondents have not sought a declaratory
judgment on the validity of this rule or its applicability to them. 3 V.S.A. '807.
       '1-404(A) of the Rules provides that A[a]ll buildings under the jurisdiction of this
subchapter in which people reside, are employed, entertained, lodged, served food3, or
congregate shall be provided with potable water delivered through a pipe system under
adequate pressure for the facilities to be served.@ Respondents wish to provide potable
water in the store by a water cooler not under pressure; this is the source of water for the
take-out coffee sold in the store. Respondents first argue that the store does not fall within
this definition, as the business has no employees, does not serve food, and its customers
do not congregate in the store. Assuming for the purposes of this issue that the building
falls within the definition of Abuildings under the jurisdiction of this subchapter,@ we find that
this is a building in which people Acongregate@ in the sense of Aregular visits by the public@
as used in 10 V.S.A. '1954(d).
       '1-404(A) goes on to provide that A[w]here it would be unreasonable to require
potable water under pressure due to the infrequency or briefness of occupancy, or the
availability of a nearby potable water supply point, the Division may determine that a water
system for the building is not required.@ During the pendency of this case, after it became
clear that Respondents believed that this section of the Rules exempted the store from the
requirement of providing potable water under pressure, this matter was recessed so that

   3
       Some guidance regarding the Agency=s interpretation of this phrase may be found
in the Rules Guidance document published on June 23, 1989, regarding Toilet
Requirements in Public Buildings, even though that document purports to interpret Rule
'4-06 (now '1-406) regarding toilets. One of the six criteria for determining whether
non-conventional toilets may be used is that Athere is no food or drink handling,
preparation, or consumption in the building.@




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Respondents could apply to the Agency for such a ruling.
       The Agency denied this determination, both at the Division level and in an internal
appeal issued by the Deputy Commissioner of the Department of Environmental
Conservation. Respondents do not appear to have attempted to appeal this determination
to the Secretary of the Agency. However, the Deputy Commissioner=s determination did
not address the reasonableness of the requirement, the infrequency or briefness of
occupancy, or the availability of a nearby potable water supply point, which are the
standards under '1-404(A) and should have been the basis for the ruling. Rather, the
determination rested on a stated Agency policy, again not found in any written regulation or
regulatory policy or procedure presented to the Court any , that Aany business that is
handling food, even packaged food, needs running water and some conventional plumbing
in order to maintain the building in sanitary condition. It has been our policy for at least two
decades that this requirement must be met with facilities installed within the building where
the food is handled.@ The determination went on to state that the minimum acceptable
facilities in the building would be hot and cold potable water under pressure, and at least
one hand washing sink, and to suggest that low-cost engineering alternatives4 might be
available.
       Even though the determination did not address the standards stated in '1-104(A),
Respondents did not further appeal the denial by the Deputy Commissioner. This Court
does not have jurisdiction of an appeal of the denial, and cannot rule on Respondents=
request for an exemption. In the present proceeding, as much as the Court and the parties
may have hoped that the '1-404(A) application would provide an acceptable alternative, it
did not do so and the appeal of that determination is not before us. If Respondents do
apply for an amendment to Permit No. WW-1-0086, they may be able to raise this
exemption issue in the context of that amendment application.


   4
      For example, it may be possible to supply only cold water from the house, to install
a small on-demand water heater in the store, and to route the grey water from the sink
to a drywell or to pump it back to the house. Respondents must apply for these
alternatives before the Agency will rule on them; Respondents may have a route of
appeal available to them for an adverse ruling. The viability of those alternatives is not
now before the Court.

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Conclusions as to Violation (10 V.S.A. '8012(c)(1)):
       The statute requires this Court to determine whether a violation has occurred, 10
V.S.A. ' 8012(b)(1), independently of reviewing and determining anew a penalty amount,
'8012(b)(4), and independently of reviewing the provisions of the order issued by the
secretary. '8012(b)(3)
       Because a permit applicable to the building had been obtained by the former
owners, and because that permit required amendment if anything substantially different
was done to the building, Respondents should have applied for and obtained an
amendment to Water Supply and Wastewater Disposal permit #WW-1-0086 before
changing the use of the building. In the course of that application, or by seeking a
declaratory judgment on the validity of the underlying rule or its applicability to them, 3
V.S.A. '807, Respondents could have challenged the jurisdiction of the Agency over the
change in use of the building, or whether the use fell into an exempt category. In any
appeal from a denial of such a permit, Respondents may also have been able to challenge
those jurisdictional issues. Without such action to challenge the jurisdiction or denial of
exemption, by continuing to operate the convenience store without first obtaining an
amendment to Water Supply and Wastewater Disposal permit #WW-1-0086, Respondents
have violated 10 V.S.A. '1953.
       Similarly, because Respondents did not further appeal the Agency=s denial of their
application for an exemption under '104(A), by operating the home occupation
convenience store without supplying potable water under pressure, Respondents have
violated '1-404(A) of the Rules requiring potable water delivered through a pipe system
under adequate pressure for the facilities to be served.


Determination of Order and Penalty (10 V.S.A. '8012(c)(3)):
       The Administrative Order contains no remedial provisions limited by 10 V.S.A.
'8012(b)(2). Therefore, the Court must review the appropriate order in this matter, as well
as to review and determine anew an appropriate penalty amount for the violations by
applying the eight criteria set forth in 10 V.S.A. '8010(b). 10 V.S.A. '8012(b)(4).
       The Secretary seeks an order setting a schedule for application for the permit
amendment, and seeks an order closing Respondents= store until they obtain it. In the

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judgment of the Court, the order should be modified to create an incentive for filing the
permit application and coming into compliance. Accordingly, within 45 days from the date
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this order becomes final, Respondents shall file the required application to amend Permit
No. #WW-1-0086, or shall cease food sales at the store. Only the preparation of coffee at
the store is affected by the lack of water in the store for the sanitary preparation of the
coffee; therefore only the preparation and sale of coffee at the store must cease
immediately. If the required application is filed and deemed complete, Respondents may
continue food sales at the store while the application is pending, with the exception of the
coffee preparation and sales.
       In addition, the Secretary seeks a penalty of $1,000 for the two violations. First we
must note that for a civil penalty to withstand constitutional scrutiny, it must be basically
remedial in effect, rather than punitive. The methodology inherent in the statute and
applied by this Court is to remove the economic benefit gained from the violation, in order
to carry out the statutory purpose of preventing the unfair economic advantage obtained by
persons who operate in violation of environmental laws, 10 V.S.A. '8001(2) and
'8010(b)(5), and then to apply the remaining statutory factors to determine what additional
penalty is needed, or whether mitigating factors should reduce any element of the penalty.
That is, the entire economic benefit first must be removed to carry out a primary purpose of
the Uniform Environmental Enforcement Act: to make it less expensive to comply with the
law than to violate it. In the present case, Respondents have not achieved an economic
benefit from their failure to have installed a handwashing sink with water under pressure,
other than the avoided cost of the engineering and installation of that facility. No credible
evidence of the cost of the engineering has been presented, nor of the installation cost as
no design alternative, low-cost or otherwise.

   5
      Although the permit is entitled a Water Supply and Wastewater Disposal permit,
the Secretary=s minimum requirement seems to be the water supply to and wastewater
disposal from a handwashing sink at the building, and does not include a requirement
that a toilet be installed.




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       In the present case, no actual or potential harm to public safety, welfare or the
environment resulted from the violation; nor has there been a potential harm to public
health except from the preparation of the coffee, as all other foods are sold already
packaged and no other food is prepared or handled on the premises. '8010(b)(1). The
Secretary=s one-year delay in seeking enforcement was not unreasonable; the only
mitigating circumstance is the inherent lack of clarity in the statute and regulations
discussed above. '8010(b)(2). At least as of the time the exemption was turned down,
which was during the pendency of this action, Respondents knew or had reason to know
the violation existed. They may have failed to avail themselves of certain opportunities to
challenge the regulations or the regulations= applicability to their particular operation;
however, parties under the Uniform Environmental Enforcement Act are not required to be
represented by counsel. '8010(b)(3) and (b)(8). Respondents had no prior record of non-
compliance. '8010(b)(4). The Secretary does not seek actual costs of enforcement in the
present case. '8010(b)(7). A deterrent effect will best be achieved in the present case by
remitting a portion of the penalty conditional on achieving compliance. '8010(b)(6).
       Accordingly, taking all these factors into account, and based on the findings,
conclusions, and reasoning of this decision, it is hereby ORDERED that Paragraph A of the
Administrative Order is hereby VACATED and instead the Court will impose a total penalty
of $1,250, but only $250 of that sum shall be paid initially to the State of Vermont, to be
deposited in the general fund pursuant to 10 V.S.A. '8010(e). If the required application is
filed on or before 45 days from the date on which this order becomes final, the remaining
$1,000 of the penalty shall be placed in escrow. If the permit amendment application is
approved, the escrowed funds may be drawn upon by Respondents to pay for the
engineering or installation work, upon order of the Court. If the permit amendment
application is denied, the funds may remain in escrow during any appeal of such denial.
After approval of the work under the permit amendment, any excess remaining in the
escrow account shall be returned to Respondents. If Respondents instead elect to cease
operation of the store, any excess remaining in the escrow account shall be returned to
Respondents.
       If the required application is not filed in the allotted time, and an extension of time or
stay is not granted by this Court or the Vermont Supreme Court, then the remaining $1,000

                                              10
in the escrow account shall become penalty and shall be paid to the State of Vermont, to
be
deposited in the general fund pursuant to 10 V.S.A. '8010(e).


Rights of Appeal (10 V.S.A. '8012(c)(4) and (5)):
      WARNING: this decision will become final if no appeal is requested within 10 days
of receipt of this decision. Respondent and the Secretary of the Agency of Natural
Resources have a right to appeal this decision. The procedures for requesting an appeal
are found in the Vermont Rules of Appellate Procedure (V.R.A.P.) subject to the
exceptions in Vermont Rules of Civil Procedure (V.R.C.P.) 76(a)(3) and (d)(5). Within 10
days of receipt of this Order, any party seeking to file an appeal must file the notice of
appeal with the Clerk of this Court, together with the applicable filing fee. Questions may
be addressed to the Clerk of the Vermont Supreme Court, 111 State Street, Montpelier, VT
05609-0801, (802) 828-3276. An appeal to the Supreme Court operates as a stay of
payment of a penalty, but does not stay any other aspect of an order issued by this Court.
10 V.S.A. '8013(d). A party may petition the Supreme Court for a stay under the
provisions of V.R.C.P. 62 and V.R.A.P. 8.



                                      th
      Done at Barre, Vermont, this 6 day of October, 2000.




                                                 ____________________________
                                                 Merideth Wright
                                                 Environmental Judge




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