Relating to Real Estate

Donald Marsh, Jr. filed an application with the Maryland Department of the Environment (MDE) on March 30, 2009 for a water column lease, pursuant to which he planned to raise oysters from seed in cages made of plastic-coated wire mesh in three 16-acre areas in Chincoteague Bay. On April 6, 2015, the Court of Special Appeals held that no evidence that rose to the level of a threat to the public health, safety, or welfare sufficient to deny Marsh’s application was presented to the administrative law judge (ALJ) who considered the application. Therefore, Marsh’s application should not have been denied at the agency level. Diffendal v. Department of Natural Resources, 222 Md. App. 387, 112 A.3d 1116 (2015).

Along the way, after three years of review of the application by the MDE, the Department of Natural Resources (DNR), the United States Army Corps of Engineers, and other agencies, the DNR concluded that the location requested in Marsh’s application met all seven criteria set forth in Maryland Code, Natural Resources Article §4-11A-08(c) and that there was no reasonable cause to deny the lease to protect the public health, safety, or welfare.

On February 20, 2013, after a three-day hearing, an ALJ issued a decision denying Marsh’s application. The ALJ considered that the application should have been considered for a submerged land lease rather than a water column lease, but that the criteria for both were the same.

More significantly, the ALJ thought that the public trust doctrine was applicable and that Marsh’s application should be denied because a lease issued pursuant to it would have blocked the public’s right to navigate and fish in the area of the lease, which outweighed Marsh’s interest in the lease. This was considered the final agency decision.

The decision of the ALJ was appealed to the Circuit Court for Anne Arundel County, which reversed, and then that was appealed to the Court of Special Appeals. In the reported opinion noted above, the Court of Special Appeals affirmed the decision of the circuit court.

The Court of Special Appeals noted that the “navigable waterway within Maryland’s boundaries and the lands beneath them are ‘held’ by the State for the benefit of the inhabitants of Maryland.” Therefore, under the public trust doctrine, the State acts as a “quasi trustee for the public benefit and to support the rights of navigation and fishing to which the entire public are entitled therein.”

Where the Court of Special Appeals differed from the ALJ was in holding that the General Assembly was exercising its regulatory power as quasi-trustee when it enacted Subtitle 11A of the Natural Resources Article. Therefore, if an application for a submerged land lease or a water column lease meets the requirements of the statute, it must be approved unless denial is appropriate to protect the public health, safety, and welfare. The interests of other persons, such as those who want to use the water for boating or fishing, which are not explicitly set forth in the Natural Resources Article, are not entitled to be considered.

For questions, please contact Ed Levin (410) 576-1900.