A landmark oyster lease case in the coastal bays could turn the tide for aquaculture in the Chesapeake Bay and its tributaries.

In April, Maryland’s Court of Special Appeals ruled that Donald Marsh, a Harvard Business School graduate-turned-oyster farmer, could have a lease to farm shellfish in Chincoteague Bay, a mile south of South Point and near Ocean City. The case, Michael Diffendal et. al v. Maryland Department of Natural Resources, has wound its way through the courts and the public appeals process for three years. Marsh has been trying to raise oysters for close to five years.

The 18 plaintiffs, a group of local residents and watermen, argued that the Department of Natural Resources was attempting to issue Marsh the wrong kind of lease. Marsh and the DNR maintained his lease was for water-column aquaculture, which refers to anything placed on the surface and running below it. The plaintiffs argued that the lease was really for a submerged land operation, meaning that the structures would be under the water the rest on the bottom. The plaintiffs further argued that the public trust doctrine commanded the agency to look at all waterway uses, including recreation and commercial fishing.

An administrative law judge ruled for the plaintiffs on both counts. But a circuit court reversed the findings, saying the DNR had issued the right kind of lease and that the “public trust doctrine” did not apply. 

In April, the Court of Special Appeals affirmed the circuit court decision and paved the way for Marsh to acquire the lease.

“In sum, none of the evidence presented by protestants before the administrative law judge rose to the level of a threat to the public health, safety, or welfare sufficient to justify a denial of the lease application for reasonable cause,” wrote Judge Deborah Eylar.

DNR officials cheered the decision. Since 2009, when aquaculture was legalized in every county, the department has tried to promote raising oysters as a sustainable business while balancing the needs of others who want water access. DNR officials have been clear in their support for aquaculture. It has been part of the department’s long-range oyster restoration plan. Oysters filter the water, provide habitat and deliver excellent ecological benefits. Having private industry invest in growing them creates jobs as well as ecological services, and may reduce pressure on the wild oyster stock.

In many other conflicts, the department, the oyster farmers and the neighbors have worked out deals; oyster farmers have set their leases back, or moved them away from homes, or shrunk their size to show neighborly goodwill.

But a handful of cases, like Marsh’s, have gotten ugly and expensive. DNR attorneys devoted many taxpayer-financed state hours to the Diffendal case and several others because the department believes that raising oysters on private grounds is in the public’s interest and its process fair.

“This case was really important for us, for our future,” said Karl Roscher, the DNR’s oyster aquaculture manager. “It recognized the department’s process and said it was legally sufficient, what was being done.”

The case has already made a difference in one aquaculture lease. In 2012, J.D. Blackwell, who operates 38 North Oysters in Ridge, MD, applied to lease 76 acres in Calvert Bay. The Vallandingham family, which owns and farms land near the lease, objected, so he reduced the footprint to about half of the original request.  

Dale Vallindingham, in particular, was concerned he wouldn’t be able to duck hunt. He filed a formal protest. In May, an administrative law judge ruled against Vallindingham and said that the DNR could issue the lease. In the decision, the administrative law judge referenced the Diffendal case.

“Protestors contend that DNR is obligated under the public trust doctrine to consider a proposed lease’s potential impacts to hunting, fishing, recreation and navigation in the proposed lease area beyond the location restrictions established in statute. Specifically, they contend that this proposed project will interfere with their ability to hunt, fish, crab, navigate and recreate in the area,” the judge wrote. “Nearly identical arguments were rejected by the Court of Special Appeals in a reported opinion issued on April 6, 2015, Diffendal vs. DNR.”

The judge continued, stating that according to the Diffendal ruling, once the DNR determines a lease meets the requirements, the lease must be issued.

Oyster farmers like Blackwell would like to help the state reach their goal of getting more oysters in the water. But they’re limited by space, and must wait to grow until they receive leases. In addition to the 35 acres Blackwell plans to farm in Calvert Bay, he is also seeking to expand a lease at Penny Lane, on the Chesapeake Bay, from 3 acres to 19 acres. Last year, he said, he sold a million oysters. He would have sold more, but he ran out of product, and had no space to make more.

“I didn’t exist in 2013. And in 2014, I did pretty well,” Blackwell said. 

But, he added, these kinds of legal fights limit who will be able to enter the industry. The Penny Lane lease may end up in court. A neighboring landowner has protested it. But he did not attend the public hearing he requested to address concerns, opting instead for a private meeting with Roscher.

“If someone says to me, ‘I want to grow oysters,’ I would say to them, ‘Great. Can you live for four years without any income?’” Blackwell said. “It really limits who will be able to enter the industry. And that’s too bad. Because I am a nursery system for crab and fish and eel, and nobody has to pay for it. It’s a free service I give the state of Maryland.”

Patrick Hudson, a Baltimore native who runs an oyster farm near Blackwell on St. Jerome Creek, hasn’t had to endure a formal protest for his leases. But, Hudson said he switched from floats on top of the water to cages underneath it when neighbors objected to the floats.

“One thing I’ve learned in this business is that people want to feel like they’re part of the process,” Hudson said. “If they think they don’t have a role, they get angry.”

That’s the case with the Vallindinghams, who said they felt DNR officials didn’t listen to their concerns. 

“DNR listens, but they just turn their head,” Dale Vallindingham said. 

Added his sister, Deb Raley: “Based on the judge’s decision (in Vallindingham and Diffendal), the DNR doesn’t have to listen. They follow the law. The law doesn’t help anyone with any of our concerns.”

The one person who has clearly not benefitted from the Marsh/Diffendal case is Marsh himself. Five years after he first began the process, he is still not growing oysters. 

While the DNR has issued him his lease, and he is paying for it, he still needs a permit from the Army Corps of Engineers. That federal agency runs its own review process in Maryland after the DNR finishes its review, though the two agencies have a simultaneous review in Virginia.

Many Maryland oyster farmers say the Corps’ permitting can delay them as much as two years. Virginia oyster farmers generally get their permits in four months. 

Asked why Marsh has had to wait so long, Army Corps Baltimore District regulatory branch chief William Seib said Marsh’s case is “a complex project.” He said the average wait is 41 days for general permits; 250 days for complex ones.

Marsh is happy for friends like Blackwell, who have benefitted from his case, but can’t understand why he hasn’t. “I can’t seem to get the Army Corps to act. I ask, and they say they’re working on it. That is what they have said for five years now,” Marsh said.