On its face, the law applied by the trial court seemingly supported the judgment.  A county like Campbell is a “person” to whom the “Discharge of Oil into Waters” law (part of the State Water Control Law) applies.  See Virginia Code sections 62.1-44.34:14 through 62.1-44.34:23 (the “Oil Discharge Law”).  Also, what occurred there, the “passive, gradual seepage of leachate and landfill gas” appears (in isolation, at least) to fit the definitions of “oil” and “discharge” making the person liable for damages, attorneys’ fees and costs under the Oil Discharge Law.

However, the Virginia Supreme Court’s majority looked beyond the statutory language in the Oil Discharge Law that the trial court used to find the County liable.  The Court held that there is another statutory scheme that  comprehensively addressed prevention, remediation and penalties associated with slow seepage of landfill leachate and gasses from a landfill: the Virginia Waste Management Act (“VWMA”), see Virginia Code sections 10.1-1400 through 10.1-1457, and the Virginia Solid Waste Management Regulations (“SWMR”) adopted pursuant thereto, 9 VAC section 20-81-10, et seq. 

The plaintiffs (the Royals) could not point to another provision of the Water Discharge Law that applied to a landfill operation.  Given the “larger legislative context” of the VWMA and SWMR, and the apparent lack of a General Assembly intent that the Oil Discharge Law apply to a landfill operation, the Virginia Supreme Court held the VWMA and its SWMR “exclusively applied” as the General Assembly intended them to occupy the entire field.  The Oil Discharge Law simply did not apply.

This analysis and finding lead to the reversal of the $9.6 million judgment and final judgment for the County for several additional reasons. 

First, the only damages instruction offered to the jury was nearly word-for-word from the Oil Discharge Law.  This instruction was the “law of the case” and binding on the parties and even the Virginia Supreme Court.  Since the Oil Discharge Law did not apply, the liability under the law was reversed.  Second, although the Royals had a second claim for inverse condemnation, the damages instruction did not contain the legal standard for damages under inverse condemnation.  Finally, because there was no further basis for liability and the trial had been concluded using the jury instructions given, a remand was not appropriate, and final judgment for the County followed.

The dissent strongly disagreed. 

The dissent (Justice Lemons and Justice Powell) asserted that the definitions and the other wording of the Oil Discharge Law plainly applied.  They pointed out that the scope of the Oil Discharge Law was broad and apparently intended by the General Assembly to “supplement” other, existing laws for the purposes of the statute.  The dissent adopted the reasoning of a federal district court decision, Gallobin v. Air Distributing Co., 838 F.Supp. 255 (E.D. Va. 1993), which concluded that “the statute’s purpose is to provide the Commonwealth of Virginia or any political subdivision thereof or any person with a remedy when a discharge of oil causes harm to human health or welfare, harm to the environment, or damage to personal or real property.”  That being the case, the dissent would have held the Oil Discharge Law applied to make Campbell County liable and upheld the trial court.

This opinion shows that “plain meaning,” while very important in the interpretation of statutes, must sometimes take a back seat to an overall intention of the Virginia General Assembly when a statutory scheme is involved that occupies the entire field.  This time, it worked to the benefit of Campbell County.  Big time.

(To be clear, secondary roads are more than just your subdivision streets.  They include nearly all roads with a number above 600.  These include significant carriers of traffic including the Fairfax County Parkway, Robious Road in Chesterfield County, and many of the major through routes in rural counties.)

It is well known that the “crumbling” state highway system is in bad shape due to years and years of deferring maintenance by the General Assembly.  Even the conservative blog Bacon’s Rebellion has forcefully stated, “Virginia is not spending enough on its transportation system.” See Bacon’s Rebellion post, “A Glimpse into Virginia’s Road Maintenance Future?” 

Given this “legacy cost” associated with years and years of deferred maintenance, and the anticipated costs associated with future required maintenance, counties are understandably opposed.  Many counties see hundreds of millions of dollars spent just to perform required but unfunded maintenance.  They criticize the state for failing in its responsibilities and describe ”devolution” as yet another unfunded mandate “that is neither justifiable nor reasonable.”  See “Why road ‘devolution’ is a bad idea for northern Virginia” by the Chairs of the governing bodies of Arlington County, Loudoun County and Prince William County.

Jim Campbell, the Executive Director for the Virginia Association of Counties does not mince words.  He sees this proposed transfer of the responsibility and costs of secondary road maintenance another step in a long history of “devolution” passing mandates and costs on to localities.  He says, “[W]hile state lawmakers beat their chests and brag about reducing taxes, they are actually vicariously causing local property taxes to increase.”  In effect, “$60 million of your local property taxes were remitted each year to balance the state budget.” 

On the underfunding of maintenance by the state, Campbell reports, “transportation dollars are so scarce that Virginia is losing federal transportation money because it cannot provide the modest matching funds.”  He describes the condition of the state highway system today as a ”neglected system of potholes and traffic gridlock.”  Campbell concludes his op ed by suggesting that allowing counties more flexible taxing authority to go with the mandates may be one solution to paying for the needed road maintenance.  His op ed on the subject, “State Forces Local Taxes Higher” was published in the December 11, 2011 Richmond Times-Dispatch.

Devolution of the state secondary highway system may happen whether local governments are opposed or not.  Some members of the General Assembly suggest that local governments need to step up to fund secondary roads given the fact that localities approve the development of new secondary roads with no fiscal obligation.  Local governments respond that there are many major state secondary roads and many older subdivision roads that have nothing to do with the land use policies or decisions of current governing bodies, and given the “legacy cost” of a system woefully-underfunded for years, devolution is fundamentally unfair.

Some members of the Virginia General Assembly agree with VACo’s Jim Campbell that localities cannot be given this mandate without the tax authority necessary to pay for it.  See Senator Watkins’ quote in Chesterfield Observer, November 23, 2011. 

Whatever the answer, the 2012 Virginia General Assembly will be grappling with devolution and whether all of the state secondary road system will be passed off on local governments, or perhaps just some larger localities.  If so, this will be the largest mandate to local governments in a generation and will undo a system that has been in place since the Byrd Act in 1932. 

If devolution comes, a big question is whether the proposal for devolution be unfunded or accompanied by the necessary local control, revenues and taxing authority?  Some local elected officials might welcome devolution if ownership, local control, revenues and additional taxing authority come with it. See John Cook’s December 7, 2011 op ed from Washington Post, “How Virginia Can Make Devolution Work.”

What do you think?  Is devolution of the state secondary highway system to local governments a good idea? 

If so, is devolution a good idea for all local governments, even the rural ones that are not much more developed than they were in 1932?  And if so, what should the state provide local governments in the way of revenue, ownership, local control and taxing authority to allow them to do what the state has not — properly fund secondary highway maintenance?

During the session, the state legislature adopted some important changes in the law affecting local governments.  Over the coming weeks, I will be touching on some of the most significant bills.  In this post, I’ll discuss HB 1588 (and its companion, SB 1350), which will change the manner in which tax appeals are handled effective for tax year 2012.

Tax assessment cases have always been difficult for taxpayers to win. Some form of manifest error must be shown, the taxpayer bears the burden of proof, and a mere difference of opinion is insufficient to prevail.  The law in this regard has mostly been well-settled.  For a discussion of much of the law in this area, see the previous blog post on TB Venture LLC v. Arlington County and the three-part series of posts on West Creek Associates v. Goochland County: Part 1, Part 2 and Part 3.

In the 2011 General Assembly session, an attempt was made to change the tax appeal procedure and burdens on taxpayers.  Early versions of HB 1588 and SB1350 would have even completely shifted the burden of proof from the taxpayer to the locality.  (If successful, these early versions would have resulted in the only lawsuits in America in which the plaintiff would have had absolutely no burden!)

After a compromise and several amendments, the final versions of the bills will result in some significant changes to tax appeal procedures, effective for the 2012 tax year. 

In brief:

– Written notice will be required of certain of taxpayer’s rights in the event of an owner appeal to a board of equalization or circuit court involving residential property containing less than four units.  Virginia Code section 58.1-3331.E, as amended.

– For board of equalization appeals, if provision of assessment records is not given to an owner of residential property containing less than four units as required by law, the assessor is required to present certain types of evidence first in the BOE hearing.  There is a change in the evidentiary standard. Virginia Code section 58.1-3379, as amended.

– For circuit court appeals, the law is unchanged for most tax assessment appeals, but for appeals seeking “relief from real property taxes” there are change in the procedure.  There is a difference in evidentiary standard.  In addition, if the assessor’s records are not produced as required by law in an owner’s appeal involving residential property containing less than four units, the assessor must produce certain types of evidence first at trial. Virginia Code section 58.1-3984.B, as amended.

The wording of some of these amendments is complex, and is still being interpreted by attorneys who practice in this area.  Litigation is likely for many years before the meaning of these amendments are truly decided.

A Sands Anderson Webinar will be held in the Spring to assist local government attorneys and assessors in interpreting these new amendments.  Check back to this site and the Sands Anderson PC website, www.SandsAnderson.com, for further details.

Need for the Bill

This bill was much needed. Prior to this bill, a BZA has been held to be a necessary party in an appeal. Board of Supervisors of Fairfax County v. Board of Zoning Appeals of Fairfax County, 225 Va. 235, 238, 302 S.E.2d 19 (1983) (“[U]ntil return on the writ of certiorari is made by the board of zoning appeals, the only necessary parties to a proceeding under [the predecessor statute to Virginia Code § 15.2-2314] are the aggrieved person and the board.”)

Being named as a party (and its chair often being served with process by the local sheriff) often resulted in angst on the part of the BZAs. BZAs felt they were “being sued,” and this was often reported in the local media. Localities and their BZAs argued over whether the BZA is a “real” party on appeal, which needs counsel, or merely named so it can produce its record for consideration by the circuit court. Being named as a party lead many BZAs to ask their localities for counsel, and in some instances, to sue for it. See Board of Zoning Appeals of Fairfax County v. Board of Supervisors of Fairfax County, 276 Va. 550, 666 S.E.2d 315 (2008).

HB 1063 largely resolves these problems.

Significant Changes in HB 1063

First, service of the petition for writ of certiorari will be served upon the “secretary of the board of zoning appeals or, if no secretary exists, the chair of the board of zoning appeals.” This will allow the BZA to designate a person not on the board as secretary, such as a staff member more likely to have the record as a practical matter. This would avoid service on any member of the BZA, at the option of the local BZA.

Second, and perhaps most significantly, an appeal from a decision of the BZA no longer will name the BZA. Rather, a petition for writ of certiorari to circuit court will be styled, “In Re: [date] Decision of the Board of Zoning Appeals of [locality name].” The BZA is no longer a necessary or even an appropriate party. Rather, the BZA is instructed to “participate in the proceedings to the extent required by this section.” The section’s only apparent requirement for the BZA, which is unamended by the bill, requires the BZA to provide its record to the circuit court.

Another, arguably unrelated change clarifies who is a “necessary party.” The bill expressly lists “governing body, the landowner, and the applicant before the board of zoning appeals.” This listing is helpful to the appellant, and eliminates arguments on this issue on appeal. This provision guarantees the governing body a say on appeal, if so desired. However, this amendment requires that the governing body be involved on some level. In the past, a governing body was able to have no involvement in cases in which it had no interest – a variance dispute between two neighbors, for example. Now, the governing body is required to be named. Presumably, the local government attorney representing the governing body can defer to the other parties, or simply default if the governing body has no interest in the case.

Lastly, the bill requires that the written notice of appeal required for a zoning administrator determination to be final under Virginia Code § 15.2-2311(A) to include the cost of appeal and reference to where additional information may be obtained regarding filing an appeal. This is helpful information to prospective appellants and is easily given. By statute, failure to provide this additional information means the zoning administrator’s determination is not final.

Lessons from HB 1063

One result of this bill is that BZAs will not longer be able to defend their decisions on appeal, even if they wish to. But this makes sense. BZAs are quasi-judicial bodies, in almost all cases. They should act like courts in making their determinations. BZAs are not proper parties on appeal, any more than courts or their judges are parties on appeal of their decisions.

Without a role for the BZA as a party on appeal, the BZA’s decision must speak for itself. BZAs, appellants and zoning staff involved in their cases should be aware of the importance of the determination of the BZA in case of appeal. The decision should be clear.

Also, although unrelated to HB 1063, on appeal to circuit court of BZA decisions on zoning administrator determinations, the “plainly wrong” standard for review not longer applies. Instead, BZAs get a rebuttable presumption of correctness for their factual findings, but no presumption in favor of their legal determinations, which are reviewed de novo (“as if new”) on appeal. See Virginia Code § 15.2-2314. Therefore, parties and BZAs should consider the importance of factual findings in these cases.

Conclusion

HB 1063 is a helpful simplification of the procedure for appeals of BZA decisions. While not making cases before BZAs any simpler, this bill clarifies that on appeal – as with a court – it is the BZA’s decision that must stand or fall. The BZA is not a party and has no role beyond providing the record. In response, BZAs should ensure that the record is complete and that the reasoning for their decisions are clear in that record.

The text of the new law says:

“§ 1. Notwithstanding the provisions of any cash proffer requested, offered, or accepted pursuant to § 15.2-2298, 15.2-2303, or 15.2-2303.1 of the Code of Virginia for residential construction on a per-dwelling unit or per-home basis, cash payment made pursuant to such a cash proffer shall be collected or accepted by any locality only after completion of the final inspection and prior to the time of the issuance of any certificate of occupancy for the subject property.”

These bills were adopted as a priority of the Home Builders Association of Virginia as a benefit to struggling homebuilders. They were intended to save the financing costs on money borrowed to pay the cash proffer between the date of the building permit (when these have been paid in most cases) and the date of the certificate of occupancy (when the builder can close on the home and pay off the debt).

Good for the homebuilders. But there are issues.

First, the law is causing some practical problems. For example, unlike at the building permit stage, the local government does not typically collect money at the C.O. stage, so new procedures for the locality and another trip to the building official’s office by the builder may be required. The locality obviously loses out on the use of the money during that period for purposes such as schools and road improvements.

But the bigger issues seem to be nagging legal questions.

For example, a cash proffer is not merely a statute that can be amended. It is a local zoning ordinance adopted in a specific zoning case. A proffer’s language, including the requirement (in most cases) to pay the cash proffer at the building permit stage is actually a zoning regulation, legally identical to a setback requirement or use limitation. See Jefferson Green Unit Owners Assoc. v. Gwinn, 262 Va. 449, 458, 551 S.E.2d 339 (2001) (“proffers become part of the zoning ordinance” and are legislative enactments).

This being the case, some have asked how local governments can comply with this new law but not comply with statutory prerequisites to changing such regulations, such as notice and a public hearing. Some have raised constitutional objections on similar grounds. Some have asked whether this new law may disturb vested rights. Some see proffers as more in the nature of a contract between the zoning applicant and the local government, and ask whether the law may unconstitutionally disturb these contractual relations.

With these questions and hundreds of existing proffers that specify the date of payment at the building permit stage, localities are reacting in various ways. Some localities are applying this new law prospectively only or requiring past proffers to be amended. Others are considering applying the proffers as submitted or accepted and waiting to see how future proffers are submitted. Some are not amending pre-existing proffers themselves but are implementing the delay in payment by policy.

Local government attorneys and legislative liaisons raised these serious issues with the Virginia General Assembly and Governor McDonnell before HB 374 and SB 632 were adopted and before they left the Governor’s desk. Now, they are the law.

HB 374 and SB 632 are certainly helpful to our builders in “this economy.” But, inarguably, this law also has serious issues that our local governments are left to address.

We’ve been busy! (This will explain, in part, the length of time since my last post, for which I apologize.)

Planned for several months, the webinar was well-received and timely, given two major vested rights decisions by the Virginia Supreme Court in 2009, Hale v. Board of Zoning Appeals of Blacksburg, 277 Va. 250, 673 S.E.2d 170 (2009) and Board of Supervisors of Stafford County v. Crucible, 278 Va. 152, 677 S.E.2d 283 (2009), and the amendment of the vested rights statute, Virginia Code § 15.2-2307, by the 2010 General Assembly via HB 1250.

The webinar included an overview of vested rights law that lead up to the codification of a Virginia statutory vested rights standard in 1998, the vested rights cases since codification, most notably City of Suffolk, ex rel Herbert v. Board of Zoning Appeals, 266 Va. 137, 580 S.E.2d 796 (2003), and, of course, Hale and Crucible.

The webinar also included excellent analysis by Karen Harwood, former Deputy Fairfax County Attorney and long-time legislative liaison for Fairfax County. Karen gave her perspective as one involved in both the General Assembly process that lead to the original codification of vested rights in Virginia in 1998, and this year’s process that led to this year’s HB 1250. Her extensive experience in both land use law and in the legislature, and her straight-forward commentary and advice made the webinar a learning experience for everyone.

Joining me on the panel from Sands Anderson were Ann Neal Cosby and Annemarie Cleary, fellow members of the Sands Anderson local government team and primary authors of the local government amicus curiae brief in the Crucible case. Since I authored the local government amicus curiae brief in the Hale case, Sands Anderson has been very active in the advancement of vested rights law in Virginia!

There were two primary goals in offering the webinar for free to local government attorneys, zoning officials and staff: (i) to give local governments free training at a time when their budgets are stretched, and (ii) to give timely commentary and assistance to local governments trying to address HB 1250.

As discussed in an earlier post on this blog, HB 1250 added a new defined “significant affirmative governmental act” (SAGA) to the six already delineated in the statute. Now, for the first time, a written determination by the zoning administrator can, under the right circumstances, be a SAGA. By statute, a SAGA can potentially vest rights to a use or density despite a change in the zoning ordinance. So the stakes can be quite high.

Here is an excerpted version of the outline on Vested Rights 2010, to give you an idea of the content of the webinar. Local government attorneys, zoning officials and staff members are welcome to contact me for the full outline.

Thanks to the over 200 local government attorneys, zoning officials and staff who participated, and the entire team that made the webinar a success!

We are planning another installment of the Sands Anderson Land Use Forum for Fall 2010, tentatively scheduled for November 17, 2010. What topic would you like to see presented?

Let me briefly mention some of the more significant ways that life at the BZA has become more complicated and difficult over time:

1993. First statutory authorization of zoning administrator vested rights determinations, complex legal and factual cases that are quite adversarial when appealed to the BZA. 1993 Acts ch. 672 (amending former Virginia Code § 15.1-491, now § 15.2-2286(A)(4)).

1995. The so-called “sixty-day rule” is adopted. 1995 Va Acts ch. 424 (amending Virginia Code § 15.1-496.1, now § 15.2-2311(c)). The complicated and curious statutory exception to the settled general “no estoppel against local government” has been raised more and more by landowners in recent years. See, e.g., Goyonaga v. Board of Zoning Appeals of Falls Church, 275 Va. 232, 244, 657 S.E.2d 153 (2008)

2003. Virginia State Bar issued LEO 1785 (November 14, 2003), which declared it unethical for a local government attorney to provide any legal services to a BZA (even review the advertisement) and later represent the zoning administrator in that case. This caused many local government attorneys (including this one) to take the position that they would not represent the BZA at all. Many local governments decline to hire their BZAs counsel when requested. Given the complex nature of what a BZA is expected to do, this has sometimes caused or exacerbated a division between the local BZA and the governing body. See, e.g., Board of Zoning Appeals of Fairfax County v. Board of Supervisors of Fairfax County, 276 Va. 550, 550, 666 S.E.2d 315 (2008).

2004. BZAs used to issue variances more frequently as a “relief valve” in many communities. Cochran v. Fairfax County Board of Zoning Appeals, 267 Va. 756, 756, 594 S.E.2d 571 (2004) largely shut the valve by clarifying the tough standard to qualify for a variance. This has caused more appeals of zoning administrator determinations to the BZA, which are frequently quite adversarial between the locality and the landowner.

2006. As BZAs were called upon to hear increasingly complex and numerous appeals from zoning administrator determinations, they were given less deference on appeal. 2006 Va. Acts c.446 (amending Virginia Code § 15.2-2314). Since July 1, 2006, BZAs are only given a presumption of correctness on factual determinations, and all legal issues are presented to the circuit court de novo. And, of course, when an appeal goes to circuit court, the BZA gets named as a party.  Note: This was amended in 2010 to name necessary parties on appeal, and no longer include the BZA as a party on appeal.

2009. The General Assembly reacts to Cochran and deletes two words from Virginia Code section 15.2-2309 — “approaching confiscation.”  HB 2326, 2009 Acts of Assembly chapter 206. No caselaw so far has said what this means or will mean.  Although it undoubtedly must mean something, the rest of the stringent requirements and terms are still in the statute unamended.  As one example, the BZA must still affirmatively find “undue hardship” notwithstanding the 2009 amendment.  Without guidance, additional uncertainty about the variance standard is another way it is tough to be a BZA member.  The bar has been lowered in some way, but how? And how much?

There is going to be greater detail in an article I will publish in the coming year.  McRoberts, Andrew R., Boards of Zoning Appeals in Virginia: Quasi-Judicial and Increasingly Difficult, Journal of Local Government Law, Vol. XX No.2, Winter 2010, p.12.  

What are your thoughts on the plight of our BZAs and the increasing complexity of their job? What’s a better way for local governments deal with them? Y0ur comments are welcome in the form below. Please let us hear from you!