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Diffendal v. Department of Natural Resources

Court of Special Appeals of Maryland

April 6, 2015

MICHAEL DIFFENDAL, ET AL.
v.
DEPARTMENT OF NATURAL RESOURCES, ET AL

Appeal from the Circuit Court for Anne Arundel County. William C. Mulford, Judge.

Argued by: Cynthia E. Young of Annapolis, MD. Hugh Cropper, IV (Cowdrey Thompson, PC) of Ocean City, MD for Appellant.

Argued by: Julia G. Solomon (Douglas F. Gansler, Attorney General on the brief) all of Annapolis, MD. Mark F. Gabler of Annapolis, MD on his brief for Appellee.

Panel: Kehoe, Friedman, Moylan, Charles E., Jr. Retired, Specially Assigned, JJ.

Eyler, Deborah S., J.

OPINION

Page 1117

[222 Md.App. 390] Moylan, J.

This appeal arises from the final decision of the Maryland Department of Natural Resources (" DNR" ) to deny an application for an aquaculture lease for three areas in the Chincoteague Bay in Worcester County. The DNR's decision was reversed on judicial review in the Circuit Court for Anne Arundel County.

The appellants are 18 individuals (and one joint trust established by two of these individuals) who are nearby residents, property owners, and commercial watermen, and who filed petitions of protest with the DNR and participated in the proceedings below.[1] The appellees are Donald

Page 1118

Marsh, Jr., the applicant for the lease, and the DNR.

In three briefs,[2] the appellants present ten overlapping questions, which we have combined, condensed, and rephrased as two:

I. Was the DNR's decision that the lease application was for a " submerged land lease," not a " water column [222 Md.App. 391] lease," legally correct and supported by substantial evidence in the record?
II. Was the DNR's decision that the public trust doctrine required it to consider the impact of the proposed lease on navigation and fishing in the area legally correct, and, if so, was the finding that negative effects on navigation and fishing justified denial of the lease supported by substantial evidence in the record?

For the following reasons, we shall affirm the judgment of the circuit court.

FACTS AND PROCEEDINGS

A. Aquaculture Leases in Maryland

Title 4 of the Natural Resources Article (" NR" ) governs " Fish and fisheries." Subtitle 11A pertains to " Aquaculture," which is " the commercial rearing of fish or aquatic plants for sale, trade, barter, or shipment." Md. Code (1973, 2012 Repl. Vol.), § 4-11A-01(b) of the NR Article. In enacting subtitle 11A, the General Assembly intended to " promote the development of an aquaculture industry in [Maryland]" and to streamline the procedure for applying for aquaculture leases. See NR § 4-11A-03(b) & (c) (addressing legislative intent). Since July of 2011, the DNR has been the agency charged with reviewing and deciding whether to grant all aquaculture lease applications.[3]

The DNR issues two types of aquaculture leases: water column leases and submerged land leases. NR § 4-11A-01(d). A water column lease is " a lease of the column of water on or under the surface of the water and above the surface of the submerged land." NR § 4-11A-01(p). A submerged land lease is a lease of " any land lying beneath the waters of the [222 Md.App. 392] State . . . for cultivating oysters and other shellfish for commercial purposes." NR § 4-11A-01(n).

A person or entity seeking an aquaculture lease must file an application with the DNR and pay a non-refundable fee. NR § 4-11A-09(a). The DNR, in conjunction with the MDE, other internal agencies, and the United States Army Corps of Engineers (" USACE" ), conducts an extensive review to determine if the relevant statutory criteria are satisfied. Most of the statutory criteria for water column and submerged land leases are identical. For both, the DNR may issue a lease in waters that have been classified by the MDE as " approved, conditionally approved, or restricted for harvest." NR § § 4-11A-07(b)(1) (submerged land lease); 4-11A-08(b)(1) (water column lease). The DNR may not issue either such lease if the areas proposed to be leased are:

Page 1119

(i) Within a minimum of 50 feet of shoreline or any pier without the written permission of the riparian owner at the time of initial application for the lease;
(ii) Within 150 feet of the public shellfish fishery or a registered pound net site;
(iii) Within 150 feet of any oyster reserve or a Yates Bar located in an oyster sanctuary; [4]
(iv) Within 150 feet of a federal navigational channel;
(v) Subject to paragraph (2) of this subsection, in any creek, cove, bay, or inlet less than 300 feet wide at its mouth at mean low tide;
(vi) In an SAV Protection Zone; [5] or
(vii) In a setback or buffer from the Assateague Island National Seashore established by the [DNR].

[222 Md.App. 393] NR § § 4-11A-07(c) (submerged land lease); 4-11A-08(c) (water column lease).

For submerged land leases in any of the coastal bay areas, the DNR may " establish submerged land areas . . . that . . . [a]re preapproved for leasing; . . . [that m]ay not be leased; [or that m]ay be approved for leasing only on specific application and review by the [DNR]." NR § 4-11A-07(e)(1). Before preapproving areas for leasing or prohibiting leasing in a given area, the DNR " shall consider potential conflicts presented by other uses of the proposed area, including navigation, recreation, and commercial fishing." NR. § 4-11A-08(e)(2).

For both water column leases and submerged land leases, if the DNR determines that all the statutory criteria are met and the proposed lease is not within an area preapproved for leasing, the proposed lease area must be staked and notice of the proposed lease must be advertised. NR § 4-11A-09(g). At that time, interested persons may file to protest the issuance of the lease. A protestant may request a contested case hearing. Id. If no protest is filed or if a final decision is issued dismissing the protest, the DNR shall issue the lease, with or without conditions, unless it finds the lease application should be denied " for reasonable cause" in order to protect " the public health, safety, or welfare." NR § 4-11A-09(d)(4). Once a lease is issued, it may be terminated by the DNR at any time for a violation of the subtitle.

A submerged land leaseholder " may cultivate shellfish on the submerged land, in temporary protective enclosures approved by the [DNR] on the surface of the submerged land, or in any other manner authorized by the [DNR]." NR § 4-11A-08(d). A water column leaseholder may cultivate shellfish " [s]ubject to approval by the [USACE], on or under the surface of the water in a floating structure; or . . . [i]n any other manner authorized by the [DNR]." NR § 4-11A-08(d). A leaseholder may not exclude others from leased areas during the term of the lease, but non-leaseholders are prohibited [222 Md.App. 394] from removing and/or destroying shellfish or equipment from the leased areas. See NR § 4-11A-16(b).

B. Marsh's Lease Application

On March 30, 2009, Marsh filed his application for a shellfish aquaculture lease

Page 1120

with the MDE. The application was transferred to the DNR following the change in the law noted above. Marsh sought to lease three 16-acre areas of the water column in Chincoteague Bay for the purpose of raising oysters in cages. He also sought to lease the submerged land below the water column in those same areas for raising clams in the substrate. Marsh amended his application to withdraw the request to lease the submerged land for ...


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