Opinion ID: 2302071
Heading Depth: 1
Heading Rank: 4

Heading: Proceedings In This Case

Text: The project that led to this proceeding has been before this Court twice before. See Queen Anne's Conservation v. County Comm., 382 Md. 306, 855 A.2d 325 (2004) and Foley v. Hovnanian, 410 Md. 128, 978 A.2d 222 (2009). It involves the proposed construction of a mixed-use adult community on Kent Island, in Queen Anne's County, to be known as Four Seasons at Kent Island. The project envisions 1,350 single and multifamily dwelling units, an assisted living facility, and related community and recreational facilities, to be erected on two tracts comprising 562 acres that lie on the north side of U.S. Route 50 between the towns of Chester and Stevensville. As described in the Board's brief, the parcel borders three bodies of tidal waterthe Chester River to the east; Macum Creek, a tributary of the Chester River, also to the east; and Cox Creek, which bisects the property and drains into the Chesapeake Bay. About 92% of the land lies within the 1,000 foot critical area buffer. [7] Although there has been, and remains, considerable opposition to the project, Hovnanian has managed, over the past 13 years, to obtain all of the permits and approvals necessary at this point to proceed, save for a wetlands license. In October 1999, because the project called for activity on both State and private wetlands, Hovnanian applied to DOE for a license from the Board with respect to the State wetlands and a permit from DOE with respect to the private wetlands. That application was updated at least twice, in September 2000 and November 2001. In its June 2006 Report to the Board, DOE stated that it proposed to issue a permit to directionally drill a water and a sewer line, 80 feet of which would lie beneath private tidal wetlands of Cox Creek. Actual issuance of the permit was stayed, however, pending a decision on the license. It is not an issue in this appeal. We are concerned only with the Board's denial of the license for activity on State wetlands. As noted, the license application is not in the record. The record reveals, howeverand the parties do not disputethat the license sought in the last amended application was limited to the following four elements that, collectively, directly impact only 9,939 square feet of vegetated State wetlands: (1) Construction of a 250-foot long by 33-foot wide pile-supported bridge across Cox Creek, to connect the two parcels; (2) Construction of a storm water management system with 18 outfalls discharging to tidal waters of Cox Creek, Macum Creek, and the Chester River; (3) Directionally drill a 168-foot 12-inch diameter water line and a 179-foot 12-inch diameter force sewer line beneath State wetlands of Cox Creek; [8] and (4) Construction of a ten-slip community marina that would be 470 feet long and eight feet wide extending into the Chester River, at the end of which would be a T head with four finger piers, six mooring piers, and three cluster-pile dolphins. Jointly with the U.S. Army Corps of Engineers, DOE held an informational hearing in Queen Anne's County on March 6, 2003. Other than to note that most of the comments were in opposition to the project, the Department's ultimate Report says little about the hearing. The Wetlands Administrator, in his report, stated that about 50 people were in attendance, 11 spoke, and six of them were in opposition. In its June 2006 Report and Recommendation, DOE noted that, in 2005, an empty and damaged eagle's nest had been discovered near the proposed bridge and that, because, despite its condition, the nest was deemed an active one, Hovnanian had agreed not to do any work in any area that could adversely affect the eagles until it could be determined whether the eagles would return. The Report also noted that Hovnanian had modified its initial plan for the marina pier, reducing it from 72 to 10 slips and reducing the deck at the end of the pier from 1,500 to 600 square feet. The DOE Report addressed eight issues: (1) An alternatives analysiswhere else could this project be located: DOE seemed to accept that there were no feasible alternative locations. (2) Avoidance and minimization: DOE noted that Hovnanian had agreed to reduce significantly the size of the proposed community pier. (3) Historic and archaeological resources: DOE noted that 17 potential historic sites had been identified and that an agreement had been signed to protect those sites. (4) Threatened and endangered species: DOE noted that the only such species involved the active bald eagle nest and advised that (i) the nest would be monitored for the next three years to see if the eagle pair returned, (ii) no work would be done in the area of the nest, and (iii) if the eagles returned, the project would have to be modified. (5) Submerged aquatic vegetation: None was found at the Chester River site. Some was found at the Cox Creek and Mecum Creek sites, but the Report did not indicate what, if any, effect any of the four elements would have on that vegetation. (6) Waterfowl: DOE noted that the Chester River in the area of the project is classified as an Historic Waterfowl Staging and Concentration Area and that the Department of Natural Resources had recommended two measures to protect that area, both of which were recommended as conditions of the license. (7) Shellfish: DOE found that there were no oyster beds in the project vicinity. (8) Stormwater and Flooding: DOE noted that stormwater management plans for Phase I had been reviewed and approved by the Critical Area Commission staff. In the next section of its ReportMitigationDOE reported that a Phase II mitigation plan for both tidal and non-tidal wetland impacts had been developed and approved. The plan provided for mitigation at a 2:1 replacement ratio for the 9,939 square feet of tidal wetland impacted by the proposal, including the footprint of the proposed bridge across Cox Creek and direct impacts from one storm water outfall structure. Upon these findings, DOE recommended that a wetland license be granted for the four elements, subject to any general conditions imposed by the Board and ten special conditions intended to address the few problems noted. The Report and Recommendation was received by the Wetlands Administrator on June 12, 2006. It was released for public comment, but no comments were received by the Administrator. At the request of the applicant, consideration of the Report was delayed until March 2007 because of pending litigation. On April 11, 2007, the Administrator filed his Report, his ultimate conclusion being that [b]ased on the favorable dispositions of the State and federal reviewing agencies, and the recommendations and conditions set forth below, issuance of the wetlands license is recommended. The Administrator's Report added comments on two matters not discussed in the DOE Report. One dealt with the economic and tax benefits from the project. Based on data supplied by the applicant, the Administrator estimated that, once built out, the economic benefits to the State would be $34.7 million in goods and services on an annual basis, $440 million in retail sales and services over a 20-year period, and 100 permanent full-time jobs. Estimated tax revenues from the project were $114 million over 20 years and $3.8 million in property taxes once built out. The Administrator estimated a positive net fiscal impact over 20 years of $88 million. The second added comment concerned the impact of the project on non-tidal wetlands. The Administrator noted that the project would permanently impact 8,189 square feet of scrub-shrub/emergent non-tidal wetlands and temporarily impact 1,968 square feet of such wetlands. In addition, project activities would permanently impact 13,508 square feet of regulated non-tidal wetlands buffer and temporarily impact 3,766 square feet of such buffer. Mitigation requirements would be satisfied by the creation of 39,000 square feet of forested wetlands and 5,200 square feet of emergent/shrub-scrub wetlands located on site and adjacent to Cox Creek. With respect to tidal wetlands, the Administrator concurred in DOE's recommendation that the license be conditioned on the establishment of 19,878 square feet of tidal marsh within one growing season subsequent to the commencement of any constructionthat being the 2:1 replacement ratio recommended by DOE. The matter first came before the Board on May 9, 2007. Notwithstanding that the application met all of the criteria for a concurrence case as set forth in COMAR 23.02.04.08A, see supra, the Board classified it as an extraordinary case because a public informational hearing was to be held. The first speaker on May 9 was the Wetlands Administrator, Doldon Moore. In describing the impact of the four elements for which a license was requested, he observed that: (1) With respect to the directional drill, there would be no adverse impact on tidal water bodies or vegetative tidal wetlands. That was because directional drill bore methods disturb the soil surface only at the entrance and exit holes, and both of them were located outside the 100-foot critical area buffer; (2) With respect to the shading of wetlands by the proposed bridge and the single direct impact of the storm water structure, which comprised most or all of the 9,939 square feet of impact, mitigation at a 2:1 ratio would be required. In addition, Hovnanian had implemented an invasive species control program and continues to restore and enhance degraded tidal wetlands located on the site and a tidal pond adjacent to the Chester River; (3) The project site was located in a smart growth and State priority funding area, that it was granted critical areas growth allocation, and that 40 percent of the land would remain in green space; and (4) With respect to the eagle's nest, in the summer/fall of 2005, a storm blew the nest from the tree, the eagles had not returned in 2006 or 2007, but the site would be monitored for three years to determine its viability. In response to questions from the Governor regarding the 18 storm water outfalls into the Chester River and Cox and Macum Creeks, Mr. Moore advised that because the runoff would be pre-treated, there would be a minimum of ten percent less nutrients running off the property into tidal waters than is currently the case, which complied with critical area requirements. A representative from Hovnanian amplified that response later, pointing out that, in earlier times, storm water management, to the extent it existed, relied on large holding ponds to collect and filter the runoff, but that the current technology called for a larger number of smaller ponds, closer to the site of the runoff, supplemented by sand, gravel, and rip rap further away. The 18 small outfalls, rather than one large one, reflected the current approach. The concern that ultimately led to the negative vote by the Governor and the Comptroller was first raised by the Comptroller, who asked the Secretary of DOE, Shari Wilson, whether, from an environmental standpoint, this was a good project to have at that location. Ms. Wilson responded that there were two aspects to the question. As to the narrower aspect that was then before the Board, she said that, from an environmental standpoint, the project meets current tidal wetlands licensing requirements. She added that, in terms of the larger question, this was not a preferable site for such a large project, but again confirmed that, in terms of the application for the license that's before you, the project meets the requirements of existing law and that there was nothing particularly unusual about this project as opposed to others. The Comptroller accepted the Secretary's explanation but, though recognizing that the only issue was the license for the four minor impacts, he stated that it was important to take a step back and ask whether it was in the best interest of the State to allow the kind of development that's killing the Bay to move forward. He also expressed concern that there was some kind of a gag order floating around that prohibited Queen Anne's County Commissioners from commenting on the project. We shall address that point later; suffice it to say at this point that there was no such gag order, and the Queen Anne's County Commissioners were not precluded from expressing their opinions. Ms. Wilson responded that DOE's contact with local officials had been through water and sewer planning, but that other agencies had been working with them on the critical area issues. In response to further questions, a representative from the Critical Areas Commission for the Chesapeake and Atlantic Coastal Bays noted that about 60 percent of the land was in the critical area, that one of the critical area requirements for a project was that there be at least a ten percent reduction in pollutant runoff, and that requirement was met in this case. A representative of Hovnanian, Nancy Slepicka, emphasized that pointthat, in accordance with the critical area law, the county had designated the location as a growth area because it was near major roads, existing water and sewer facilities, and existing developments, and that the county also had designated that location as one of its priority funding areas. She noted that the county had taken at least ten different votes over the years approving the project. The Comptroller noted again his concern that the county commissioners were unable to comment on the proposal. Counsel for Hovnanian, John Zink, explained that, in 2002, Hovnanian and Queen Anne's County entered into a Development Rights and Responsibilities Agreement (DRRA) which, in return for certain substantial benefits to the county, froze all of the then-existing county development laws and regulations with respect to the project, so that it could proceed without fear that those laws or regulations might be changed mid-stream. [9] After that agreement was signed, new county commissioners took office and, in the view of Hovnanian, breached the DRRA by interfering with permits and approval. Hovnanian filed suit, and, in September 2003, the Circuit Court found the DRRA to be valid and required the county to abide by its commitments. The court reserved jurisdiction to assess, at a later time, damages incurred by Hovnanian by reason of the commissioners' conduct. The county noted an appeal. In an attempt to resolve all disputes between Hovnanian and the county regarding the project, the parties entered into a settlement agreement in October 2003. As part of that agreement, which was in the record before the Board, the county agreed to dismiss its appeal, comply diligently and in good faith with the Circuit Court judgment, and refrain from directly or indirectly oppos[ing] or interfer[ing] with any approvals for the development of [the project]. Counsel noted that the county commissioners could terminate the DRRA if Hovnanian violated its provisions, but it had not done so and the current position of the county was that the project could proceed. He said that he was unaware of any gag order, although he acknowledged that he was concerned whether opposition by a county commissioner to the issuance of a wetland license would violate at least the spirit of the agreement. The Comptroller persisted, that he had contacted four of the five commissioners and they all expressed fear of being sued by Hovnanian. [10] The next presenter, representing a non-profit organization devoted to environmental improvement, discussed some of the details of the project and confirmed the views of DOE and the Wetlands Administrator that, when built out, it would improve the water quality of the run-off. He was followed by a representative from the State Highway Administration, who advised that the Administration was satisfied with the traffic plan regarding State Route 18 submitted by Hovnanian. The Treasurer then raised the kind of question with regard to traffic congestion that the Comptroller had raised regarding environmental impactwhether the focus should be just on Route 18 or on U.S. Route 50a major highway connecting the Eastern and Western Shores of the Stateas well. John Porcari, the Secretary of Transportation who was in attendance, responded that he too had been concerned about congestion, both on Route 50 and the Chesapeake Bay Bridges. He said that he had tried to get the local land use authorities in that part of the Eastern Shore to take that into account when approving developments, but the fact was that they were not required to do so. The current requirements, he said, had been met. The Board then heard from several residents of the area who, without focusing on any of the four elements for which a license was required, expressed opposition to the project as a whole, from an environmental, traffic, and public safety point of view. Richard Altman's position was that Kent Island is not a suitable place for intensive development. One opponent, Mike Koval, had been a Queen Anne's County Commissioner from 2002 to 2006. He said that he had testified against the project at all of the hearings and averred that the people in the county did not want it. The Board then voted to defer further consideration of the matter until its next meeting on May 23. At the request of the Treasurer, the Board agreed to solicit advice on a number of questions from the Attorney General. On May 21, 2007two days before the next Board meetingthe Attorney General's Office responded to the Board's request for advice through two opinions, one dealing with the criteria for designating a priority funding area, and the other dealing with the effect of the settlement agreement on limiting the ability of Queen Anne's County Commissioners to speak out against the project. The opinion dealing with priority funding areas noted that priority funding area was a concept created by the State's smart growth law (Md. Code, §§ 5-7B-01 et seq. of the State Finance and Procurement Article (SFP)). It pointed out that the law defined seven categories of growth-related Projects, one of which was areas designated by a county. A county-designated project must meet the criteria in SFP § 5-7B-03 and must be certified to the State Department of Planning, but that the Department had no authority to overrule the county's certification. In the second opinion, the Attorney General's Office, noting both the DRRA and the settlement agreement, advised that (1) it was legally permissible for the county commissioners to agree to withhold opposition or interference, but (2) such an agreement would affect only county approvals and not State ones. Thus, the Office concluded that nothing in the DRRA or the settlement agreement could commit the commissioners to a particular position on a State wetlands license. Responding directly to the question of whether the settlement agreement constituted a gag order, the opinion declared that it did not, and that, if it did, it would be of doubtful legality. It stated that neither the DRRA nor the settlement agreement directly prohibits individual County Commissioners from expressing their views concerning the [project] or from appearing before the Board of Public Works and responding to questions. It noted, however, that counsel for Hovnanian had taken a different view and had threatened to seek indemnification from the county if an individual commissioner were to speak in opposition to the granting of a license, and that, if he pursued such a threat, a court would ultimately have to decide the matter. [11] The Board reconvened on May 23, 2007. During the two-week interval, the members had visited the site. At the outset of the renewed hearing, the Board acknowledged the two opinions from the Attorney General's Office. They were placed into the record. and the Governor read aloud the conclusions reached in the opinion concerning the effect of the settlement agreement. The discussion turned first to that issuewhether the settlement agreement limited the ability of past and present county commissioners to comment on the issuance of a wetlands license. The Comptroller said that, notwithstanding the opinion of the Attorney General's Office, the Queen Anne's County Attorney had advised the Commissioners not to testify or take any official position on the matter. The Deputy Attorney General, John B. Howard, then advised the Board unequivocally that neither the county nor the Commissioners were precluded from expressing their views on the issuance of a State license. He regarded the concern expressed by the county attorney as a red herring. The Comptroller expressed his agreement with that view but nonetheless repeated his belief that, at the behest of Hovnanian, the Commissioners have duct tape wrapped around their mouth. The Treasurer indicated her regret that the Commissioners had chosen not to appear and suggested that their absence may simply be a matter of political convenience. The Board's Secretary then referenced the second opinion, regarding priority funding areas. She informed the Board that, when a county designates such an area, the State Department of Planning is permitted to make comments on it, but not to veto it. In this case, she said, the Department of Planning had made no comment on the designation. The next presenter, at the Board's request, was the Deputy Secretary of DOE, Robert Summers. He pointed out the environmental impact of large developments generallyincreased runoff, increased pollution from runoff, treated sewage discharges, atmospheric deposition, and biological degradation of streams and habitats. He also noted that the purpose of priority funding areas is to concentrate that development in the better areas where stormwater and sewage can get state-of-the-art treatment. There were problems with any development site close to the Chesapeake Bay. Secretary Wilson agreed that we would not want to have development occurring along the shoreline, but noted again that the application before the Board appears to have met all of the state and local land use requirements. In response to a question from the Treasurer, she confirmed that DOE had considered each of the 19 criteria listed in COMAR 16.24.02.03 and found that the impact was such as warranted the Department's recommendation that the license be issued. Her point was that a broader approach than that currently in the law was advisable. The Comptroller then asked Ms. Wilson directly, for the second time, whether she regarded the project as environmentally sound, and she replied that it was, because it met all the regulations currently in force. In response to a question from the Governor, she noted that, under the regulatory criteria, DOE had to look at the impact on the 9,939 square feet of wetlands, and, given the 2:1 mitigation and other enhancements, the project met the legal requirements and the license should issue. She added that the advisability of placing a development such as this in that location was reviewed under the critical areas law, which was a separate regulatory scheme. The Secretary of Planning, Richard Hall, noted that the location had received priority funding status by the county in 2001, that the Department of Planning had reviewed it and concluded that it met the legal requirements, which is why the Department did not oppose it. He agreed that some of the regulations should be changed, but the Department had to deal with the law as it is; [w]e have a limited role with the critical area now. Attention then turned to the question of evacuating people from Kent Island in the event of a major hurricane, a matter raised by Mr. Altman at the earlier meeting on May 3. John Chew, the Director for Emergency Services for Queen Anne's County, stated that a 1,350-unit development certainly would add to the problem, but that plans had been developed for emergency evacuation of the entire Eastern Shore, including Queen Anne's County. The bottleneck would be getting people across the Chesapeake Bay bridges, which would require that evacuation begin at least three days before the storm actually hit the area. Mr. Chew stated that the National Weather Service advise[s] us well in advance of times to evacuate. The Board then heard from proponents of the project. One of them, Linda Friday, was president of the Queen Anne's County Chamber of Commerce. She estimated that the project would have a positive fiscal impact to the county of $135 million over a 20-year period. Douglas Shreve, executive director of a county business group noted that the benefits required under the DRRA were worth $40 million to the county, including an extension of the sewer system and an $8 million contribution to the expansion of the wastewater treatment system. Following their statements, several opponents testified. As before, their focus was on the project as a whole, which they felt was inappropriate for Kent Island, not on its impact on the 9,939 square feet of wetlands. Mr. Zink, counsel for Hovnanian, addressed that point, making clear that the Board was not a planning and zoning body but was limited to considering the effect of the project on the preservation of the affected wetlands and nothing more. The Comptroller raised again his belief that Hovnanian had, in effect, gagged the county commissioners. Mr. Zink denied that was the case. He iterated his belief that the settlement agreement precluded the county from opposing the issuance of the license and that, if it did so, it may be liable to indemnify Hovnanian for any loss suffered as a result, but that no commissioner was precluded from appearing before the Board and offering any opinion he or she wished to offer. The final presenters were Joseph Stevens and John Delaney, on behalf of Hovnanian. Among other things, Mr. Stevens noted that the greatest part of the 9,939 square feet of State wetland affected by the project was the 9,000 square feet that would be shaded by the 250-foot bridge across Cox Creek. That bridge, he asserted, was one that the county itself wanted, to connect the north part of Kent Island to the southeast part in order to avoid the circuitous route that people now needed to travel. Following these presentations, the Board members announced their individual decisions and the reasons for them. The Governor began by observing that the Board was required to decide whether issuance of the license was in the best interest of the State, taking into account the varying ecological, economic, developmental, recreational, and aesthetic values of the application. He also acknowledged that the Board's authority was limited to whether a wetlands license should be issued at the particular site, and that it is not authorized to order that there be no development at that site. He quoted from the statutory purpose of the Wetlands Law, to prevent the loss or despoliation of the wetlands. Having said that, the Governor then noted that this would be the largest development in the history of the critical area law, consuming about one-quarter of the total growth allocation of Queen Anne's County. He then announced his conclusion: [G]iven the size of this development, 1,350 units densely crammed into a critical area of the bay, given the lack of assurance that this will not as common sense would tell us do further damage to the wetlands and critical areas of the bay, to say nothing of the public safety concerns which I will leave to the Queen Anne's people to figure out how they justify putting 1,350 senior units in an island that gets cut off in a hurricane one storm, but because of the lack of any assurance because common sense tells us that to cram this many units into this area, I will be voting no on the application for the permit. The Treasurer disagreed and voted to approve the application. She acknowledged that she would not have chosen to put the development at that location, but observed that it had been approved by the Critical Areas Commission and by the county government, which was the body charged with planning and zoning authority. She pointed out that DOE had found the project in compliance with the 19 criteria that they were obliged to consider, that the Department of Planning had no problem with the county's priority funding determination, that it was within two growth areas, that it met all requirements of the law, and that it would have little negative impact on the wetlands themselves. She agreed that the laws needed to be strengthened but insisted that the instant case had to be decided based on the existing law. Although briefly echoing the Governor's concern about the environmental impact of the project as a whole on the Chesapeake Bay, Comptroller Franchot voted against the application because he believed that the county commissioners had been bullied and threatened and effectively silenced and that, as a result, the Board had been denied their testimony. That, he concluded, impeded the Board's ability to conduct due diligence on the matter. Hovnanian sought judicial review of the Board's denial, arguing that the Board misinterpreted its statutory authority and unlawfully extended its scope of review beyond the preservation of State wetlands, that all of the evidence supported approval of the license, and that the decision should be reversed without remand. In addressing the first issue, the court, in its memorandum, made a number of subsidiary findings, the most relevant of which were: (1) That proceedings before the Board with respect to such licenses are quasi-legislative, rather than quasi-judicial, in nature and that the standard of judicial review, therefore, was whether the Board acted within its legal boundaries; (2) That the Board had no statutory (or other) authority to adopt regulations, other than interpretive ones, at least with respect to wetlands licenses and, as a result, the provision in COMAR 23.02.04. 10 that, in determining the public interest, the Board must consider the ultimate project had no force other than as an interpretive regulation; (3) That the Governor's rationale for voting against the application was more a repudiation of the growth allocation made by the county under the critical area law than a more narrow determination that a license would unduly harm the wetlands it actually impacted; and (4) That the Comptroller's rationale regarding pressure put on the county commissioners had nothing whatever to do with the best interest of the State. In light of those findings, the court found it unnecessary to reach the evidentiary issue. In its judgment, it declared that the Board, i.e., the Governor and the Comptroller (i) made no assessment of each specific activity for which the wetlands license was sought, as it was required to do, (ii) gave no consideration to the statutory criterial applicable to the proposed activity, (iii) ignored determinations that had been made by coordinate agencies on the basis of applicable statutory criteria, (iv) supplemented the statutory criteria, and (v) applied criteria or standards different from the statutory ones. Upon those findings, it reversed the Board's decision and remanded the case for further proceedings consistent with the court's judgment.