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Fine Chopped by 99 Percent, But Reason for It Upheld

June 4, 2004 – The owners of the Lindqvist Beach property and the Planning and Natural Resources Department both got their wrists soundly slapped on Thursday by the hearing officer for the owners' challenge of a fine levied by the department last December.
In monetary terms, the owners came away the winners, with the $260,000 fine chopped by more than 99 percent, to $2,500.
But either side may yet appeal the ruling.
Planning and Natural Resources Commissioner Dean Plaskett on Dec. 5 issued a NOVA – a Notice of Violation and Assessment – penalizing V.I. Investments LLC $260,000 for having constructed a fence and two gates on the land without first securing a Coastal Zone Management permit.
V.I. Investments immediately filed a motion seeking to have the NOVA rescinded, contending that no permit was needed because the work consisted of the repair of an existing fence.
On Thursday, in a 39-page document, hearing officer Marise James laid out her conclusions and the bases on which she reached them:
"VII erected a fence and two gates without first obtaining a Coastal Zone Management permit," in violation of the V.I. Code, she wrote. "VII is liable for a penalty for the violation." However, "the penalty assessed by DPNR greatly overstates both the gravity of the harm and the gravity of the misconduct … the penalty of $260,000 is inconsistent with the record … An appropriate penalty of $2,500 is assessed for the violation."
While James ruled against the department regarding the penalty, she ruled against the property owners regarding the need for a CZM permit in order to put up the fence.
She noted that the CZM Act specifies that "no permit is required for activities related to the repair or maintenance of an object or facility where the activities do not add [to], enlarge or expand the object or facility."
The statute does not define the word "repair," she wrote, "but it is logical and appropriate to borrow the definition found in the Building Code." And that is "the replacement of existing work in a building or structure not including additional work that constitutes a structural alteration of the building, or that may constitute an enlargement in area, height or depth."
James honed in on the word "existing," as opposed to "existed," noting that the previous fence "did not exist anymore." There was, she said, no "existing fence where portions need repair."
The Chronology of Events
According to James' report, V.I. Investments said the impetus to erect the fence stemmed from two occurrences — the near-drowning of a 2-year-old child at the beach and the arrest of a taxi driver accused of the attempted rape of a passenger he allegedly had driven to the beach.
The report states that attorney George H.T. Dudley told V.I. Investments managers they could repair the existing fence without a permit. Dudley tried on Oct. 21 and 22 to reach Plaskett by telephone and then wrote him on Oct. 23 stating what the owners intended to do. Receiving no response, he wrote again on Nov. 6, and again on Nov. 10. On Nov. 20 he received a letter dated Nov. 18 saying DPNR opposed construction of the fence without a permit and that it could not make a determination without reviewing the plans. Dudley wrote back on Nov. 21 saying the plans had been submitted on Nov. 10.
Dudley next received a letter dated Nov. 24 saying the fence gate must be opened for public access within 10 days. At a meeting on Dec. 3, CZM attorney Julita De Leon said if V.I. Investments had applied for a permit, it would have been denied because of an existing easement for public access to the beach.
Dudley received a letter on Dec. 3 saying DPNR was going to issue a NOVA for unauthorized development. The NOVA was received on Dec. 5. V.I. Investments filed a motion to rescind and requested an immediate hearing. The motion was denied.
Having assessed a fine of $10,000 a day in the NOVA, Plaskett on Dec. 12 said he was doubling the daily penalty to $20,000, "at least as long as the fence is blocking the road — not only for violating the law but they're also violating my order." (See "DPNR Rejects Lindqvist Owners' Demand".)
In an agreement with DPNR, V.I. Investments subsequently agreed to open the gates to provide public access in order to halt the accumulating fines.
DPNR holds that the fencing of the property was development and therefore required a permit. While fencing had previously existed on the land and may have been the subject of vandalism, the work done was construction or reconstruction, with new post holes dug and the new fence erected in a location different from where the previous fence had been in place.
V.I. Investments says because some sort of fencing and gate had been on the property since the 1940s, the work constituted repair, not development. Further, there was no enlargement, addition or expansion; only restoration. Thus, it says, no permit was required.
Conclusions Regarding the Need for a Permit
In response to V.I. Investments' argument that DPNR did not respond to letters and phone calls concerning the fence prior to the start of work, James wrote, the department "argues that the amount of time within which a response was made was reasonable and VII acted at its own peril by erecting the gates and fencing without a permit."
But she found that "VII made good faith efforts by sending letters and making phone calls to DPNR notifying it of the activities to be conducted on the property. VII's contention that it has a good faith belief that a permit was not required is not unreasonable. It had a right to make its case to the agency, but it also had a responsibility to wait for an answer."
At the same time, James wrote, the very phone calls and letters "are consistent with an awareness that a permit or some type of approval was required." She said that V.I. Investments "displayed a cavalier attitude by making a unilateral decision that no permit would be needed and setting its own schedule and deadline."
Further, she said, the delay in responding on the part of DPNR "was due to nothing more than the slow wheels of government as experienced by everyone on a daily basis."
Her conclusions, then, were that "VII disregarded and disrupted CZM's established procedures for review of requests and applications," and "VII did not have the right to proceed prematurely without a response from CZM."
James further wrote that V.I. Investment "maintains that the issue all along has been public access, and since there was no environmental impact or potential for harm by its repair of the fence, the fine posed by DPNR is egregious."
She found that "there is no declaration by a court that establishes a right of public access over the property … Nor is there any recorded easement for public access to Lindqvist Beach."
And, she wrote, there was no evidence of environmental impact by the fence. "Quite frankly, as testified to by Mr. Padgett [V.I. Investments manager Edward Padgett] and supported by photographs, the degradation and misuse of the beach by the public is more troubling than the erection of the fence … The gravity of the harm for the failure to apply for a permit showing no environmental harm is vastly overstated."

Conclusions Regarding the Amount of the Assessment
James cited for comparison purposes three other cases in which DPNR assessed fines for CZM violations. In one, the owner was assessed $15,000 for construction of stone walls without a permit. In another, the owner was assessed $20,000 for building a seawall without a permit, but the fine was reduced to $6,500 with the owner ordered to dismantle the seawall. In the third, a land owner who ignored CZM orders for more than a year regar
ding an illegal concrete base for a fence was assessed $30,000, but the fine was reduced in a settlement to $1,500. And in none of these cases were the violators assessed on a daily basis, as was V.I. Investments.
"The enforcement record reflects remarkable leniency, even though the violations demonstrate disdain for regulatory authority," James wrote. Compared to those cases, she said, "it is clear that the penalty assessed in the instant case was excessive … DPNR's determination that the potential for harm is major is belied by the fact that the above violations were treated as minor…"
She concluded that "the maximum amount allowable in this matter is $10,000."
The $2,500 that she did assess is payable, absent further proceedings, 30 days after the final order. An appeal of the hearing examiner's ruling may be made to the Planning and Natural Resources commissioner within 30 days of the issuance of the examiner's initial decision.
What Next?
V.I. Investments erected the fence as a temporary measure. The company, meantime, is in the process of applying for a major CZM permit for its proposed subdivision of the 21-acre property for the construction of 24 homes.
At the same time, the V.I. government has proceeded with efforts to acquire the Lindqvist land through condemnation and seizure by eminent domain.
The government's own appraisals have now set the land's fair market value at $4.3 million. The government had earmarked $2.5 million from the December bond issue to acquire the property.
Attorney Henry Feuerzeig, who represented V.I. Investments in the motion to rescind the NOVA, said on Friday that the company believes the land to be worth much more than that.
He also said that "if it's the government's intent to condemn the property, I would anticipate that it would slow down development."
However, he added, "If the government still intends to proceed with the condemnation, they have to put the money up in court. I don't know that the government has $4.3 million."
Feuerzeig said that to his knowledge, the company's two resident managers, Don Rifenberg, a civil engineer, and Padgett, had not been informed of James's decision.
"They're out of the country," he said. "Their lawyer in Atlanta knows."
Any discussion of possibly appealing the ruling that a permit was required for the fence will have to wait until their return next week, he said.
The government also could appeal the reduction of the penalty assessment.

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