VA Riparian & Waterfront Property Rights at October 2018 VMRC Meeting

"VMRC decisions have direct and immediate consequences affecting the riparian property rights of Virginia's waterfront property owners. The VMRC makes these decisions at monthly meetings which are open to public. We attend the monthly VMRC meetings to represent our clients or as observers, and provide our readers a summary of the important cases."

The Virginia Marine Resources Commission (VMRC) is the state agency that manages Virginia’s marine resources. The VMRC regulates the fisheries and shellfish industries and issues permits for encroachments over state-owned submerged lands. It also manages the Virginia Wetlands Act, and the Coastal Primary Sand Dune Protection Act. VMRC decisions have direct and immediate consequences affecting the riparian property rights of Virginia's waterfront property owners. The VMRC makes these decisions at monthly meetings which are open to public. We attend the monthly VMRC meetings to represent our clients or as observers, and provide our readers a summary of the important cases.

The October meeting took place on October 30th, 2018 at 9:30. All Commission members were present.

Brian Rechtenbaugh (JPA #17-1334)

The first contested issue was the conclusion of a matter that was originally brought before the VMRC in the September 2018 meeting, but was continued. (See details of the first hearing here). This case concerned an application by Brian Rechtenbaugh, who was requesting an “after the fact” wetlands permit for improvements that he had already made to his property. In 2016 Mr. Rechtenbaugh, who owns a home in an upscale neighborhood near a tributary of the Elizabeth River, hired a contractor to fill in a 1250-square foot portion of his backyard in order to combat rising flood waters that had been coming very close to his house. At the September meeting Mr. Rechtenbaugh testified that he believed his contractor had complied with all wetlands permit requirements. However, this was not the case. In fact, no permits had been applied for or received. As a result, the VMRC Staff recommended that the Commission impose a civil penalty of $6000 dollars upon Mr. Rechtenbaugh for a “moderate impact” violation of the Virginia Tidal Wetlands Act.

The Staff also recommended that Mr. Rechtenbaugh be issued the “after the fact” permit in exchange for his agreement to purchase 1250 credits to restore an equivalent amount of wetland area near New Mill Creek, a wetland area located only two miles from Mr. Rechtenbaugh’s home. Wetland credits are currently valued at 22 dollars a square foot. This means that Mr. Rechtenbaugh would be required to pay $27,500 into the wetlands mitigation bank in addition to the civil penalty.

Mr. Rechtenbach was present at the hearing but was not represented by counsel. He testified that he made the improvements to his property in good faith, and that he was not aware that the area he filled contained wetlands. He agreed to purchase the 1250 credits but requested that the violation be reduced to “low impact,” which carries a civil penalty of 2000 dollars.

"This case demonstrates the importance of understanding the environmental regulations prior to making improvements on or near waterfront property. Had Mr. Rechtenbaugh sought the counsel of an experienced waterfront attorney he could have avoided these difficulties, which include being summoned before the VMRC, and incurring an unforeseen cost overrun on this home improvement project in the amount of $33,500."

During its deliberations, members of the Commission expressed skepticism as to Rechtenbach’s request. At one point Associate Commissioner Tankard asked the Staff representative why this should not be classified as a “serious impact” violation The Staff representative explained that not all wetlands are equal, and the wetlands on Mr. Rechtenbach’s property had not been of the “highest quality.” Furthermore, Mr. Rechtenbach had been very cooperative and there was no indication that he was aware of the presence of wetlands. When Mr. Tankard asked whether these improvements would cause additional runoff into neighboring yards, the Staff answered that it would not, because all of the neighbors’ yards had been previously filled (presumably with a permit) and this project simply brought the level of Mr. Rechtenbaugh’s land flush with his neighbors’.

Associate Commissioner Ballard asked whether there was any clear line of demarcation on the property that would have made it obvious where the wetlands began, to which the Staff replied that there was no clear way for Mr. Rechtenbaugh to have known where the wetland area was located. Associate Commissioner Everett commented that she believed that this was a moderate impact violation and not a serious impact, but she did not make a motion for a vote at that time.

Associate Commissioner Everett then asked Mr. Rechtenbaugh whether the contractor has been made aware of the violation. Mr. Rechtenbaugh answered in the negative, asserting that he wished to keep the identity of the contractor confidential and to assume all responsibility and accountability for the violation himself. Commissioner Bowman reacted strongly, saying that the failure to disclose this information indicated that, contrary to the staff assessment, Mr. Rechtenbaugh was being uncooperative. Commissioner Bowman, joined by Associate Commissioner Zydron, forcefully reminded Mr. Rechtenbaugh that he was under oath and again asked him to disclose the name of the contractor. Mr. Rechtenbaugh reluctantly gave up the contractor’s name.

At this point Ms. Everett stated that she wished to withdraw her earlier support for a moderate violation, saying she now believed that Mr. Rechtenbaugh had colluded with the contractor to knowingly violate wetlands regulations.

Commissioner Bowman called the request to reduce the civil penalty from $6000 to $2000 “laughable,” but he also reminded the other Commissioners of their duty to assess appropriate penalties and avoid seeking “retribution.” The Commissioner pointed out that the Staff recommendation had been considered by weighing all of the applicable factors. The Commission then voted unanimously for the Staff recommendation, and Mr. Rechtenbaugh promised that he would pay the $6,000 penalty in addition to purchasing the 1,250 wetland credits, at a further cost of $27,500 (for a total cost of $33,500).

This case demonstrates the importance of understanding the environmental regulations prior to making improvements on or near waterfront property. Had Mr. Rechtenbaugh sought the counsel of an experienced waterfront attorney he could have avoided these difficulties, which include being summoned before the VMRC, and incurring an unforeseen cost overrun on this home improvement project in the amount of $33,500.

Commissioner Bowman’s parting words to Mr. Rechtenbaugh were, “If your feet are getting wet, come check with us!” Any reluctance to do this should be tempered by our proprietary data which shows that, so far in 2018, the Commission has approved every contested infrastructure permit that has come before it for hearing and decision, even in those cases where the VMRC staff recommended disapproval. This data indicates that when the process is followed correctly, the system works well and applicants generally get what they want without incurring additional fines and fees. However, if the process is ignored, the results can be costly.

Drum Point Properties, LLC (JPA #16-1552)

The next item on the VMRC’s agenda was a routine infrastructure permit request to construct a 114-foot long community pier with a kayak boarding dock in a subdivision that is currently being developed on the western branch of the Elizabeth River. The project required a subaqueous permit and a wetlands permit. The Staff recommended approval.

A representative from the real estate Developer was present at the hearing. Several of the Associate Commissioners inquired whether the community pier would be constructed in addition to private piers that individual property owners would likely want to build on their riparian property, or whether the community pier was in lieu of private piers. The Developer answered that the homeowners would be allowed to exercise their riparian property rights and apply for private piers in addition to the community pier currently at issue. The Associate Commissioners then briefly discussed the idea of requiring restrictive covenants in the real estate deeds which would limit the community to having only the community pier, an idea to which the Developer was opposed. (We are aware of instances where the VMRC required restrictive covenants precluding individual piers in a planned community served by a community pier.)

However, in keeping with recent precedent, the Commission voted unanimously to approve the permit as requested. As discussed above, our proprietary data shows that the Commission has so far approved every infrastructure permit that has come before it for hearing and decision in 2018.

Mark E. Boswell (JPA 2014-295)

This matter concerned an application by Mark Boswell for an oyster lease of 7.5 acres in Little Oyster Creek in Lancaster County near the mouth of the Rappahannock River. The application was protested by several nearby property owners who were present at the hearing, but were not represented by counsel. Mr. Boswell’s application had originally been for 8.98 acres, but the VMRC staff recommended approval of the reduced area based on the protestor’s concerns. Of note, although the application would permit him to use bottom cages, Mr. Boswell testified that he does not intend to use cages at all, but only to use “spat on shell” farming. According to Mr. Boswell, the area in question is not suitable for cages because the bottom is too muddy and the cages would sink into the bottom.

The area that Mr. Boswell was requesting had been leased as an oyster ground in the past, from the 1930s until 2013, but has been vacant since 2013. The property owners are opposed to leasing the site for oyster farming because of their concerns that it could interrupt recreational activities such a boating and swimming. Although they seemed encouraged by Mr. Boswell’s stated intention not to use oyster cages, they remained in opposition to the permit because it would not prevent him from using cages in the future if he should change his mind. Furthermore, the protestors offered a presentation showing that since the cessation of oyster farming in 2013, there has been a resurgence of subaquatic vegetation (SAV) that the Virginia institute of Marine Science (VIMS) called “remarkable.”

The protestors were also opposed to the lease for health reasons. One of the property owners testified that his wife had contracted a Vibrio infection several years ago from stepping on an oyster shell in the exact area that Mr. Boswell was now proposing to lease.

Vibrio is a bacteria that inhabits coastal waters where oysters live. According to the Centers for Disease Control and Prevention (accessed at: https://www.cdc.gov/vibrio/vibrio-oysters.html), most Vibrioinfections from oysters result only in diarrhea and vomiting. However, some infections can cause more severe illnesses, including bloodstream infections and severe blistering skin lesions. Some infections can even require intensive care or limb amputations, and in rare cases Vibrio infections can be fatal.

The Staff representative testified that Vibrio is naturally present in much of Virginia’s waters, and that allowing this lease would not increase that risk. Additionally, the Staff maintained that even if cages were used in this area, it would not impact navigation. Additionally, Dr. Lukenbach from VIMS testified that even though the resurgence of SAV has been remarkable, the growth has been primarily in areas very near the shoreline, and that new growth is not likely to spread into the deeper areas where the oyster grounds would be. He noted that SAV is no longer found in water depths greater than one meter. Although SAV used to grow in water depths up to several meters in the past, the decreased water clarity in the Chesapeake Bay which has been caused primarily by polluted runoff from land has reduced the depths to which sunlight can penetrate, preventing SAV growth in deeper waters.

Associate Commissioner Tankard commented that the Staff recommendation of 7.5 acres was tailored to protect SAV and navigation, and that oyster farming increases water clarity which is also good for SAV. He pointed out that if any hazards to navigation do arise, those concerns can be addressed separately by the VMRC.

Commissioner Bowman echoed Mr. Tankard’s sentiments that the Staff recommendation represented a good compromise between competing interests. However, he strongly encouraged Mr. Boswell to keep his word and not to use oyster cages in this area. The matter was then put before the Commission for a vote, and was approved unanimously.

Thomas H. James III (JPAs 2017-184 and 2017-183)

Although these were two separate oyster lease permit applications, we will discuss them together because the facts of the cases overlap significantly.

In 2016 Mr. James submitted two oyster lease applications for areas in Nassawadox Creek in the Occohannock Neck area of Northampton County. Both of those lease applications were heavily protested by nearby property owners. The applications included areas located immediately adjacent to private property. Additionally, portions of the proposed lease area were located directly between homeowners’ privately-owned piers. Property owners objected to the permit in 2016, citing concerns ranging from loss of access to their property to invasion of privacy due to the extremely close proximity to their houses and yards.

According to proprietary data collected by our team, the VMRC is prone to approve oyster permit applications, even over the objections of property owners. As an example, prior to this month’s meeting, our proprietary data shows that the Commission approved 73% of the contested oyster lease applications that had come before it, in some cases over widespread protests and Staff recommendations to deny the permits. However, Mr. James’ 2016 permit application was a different story. Citing the lack of any type of buffer area between his proposed lease sites and private property, the VMRC voted unanimously in 2016 to deny both permits.

Now, less than two years later, Mr. James was applying for permits in almost the exact same areas for which he had been denied in 2016. But unlike the 2016 application which covered two fairly large areas, this time each of his two permits requested less acreage made up of three smaller sub-areas. However, this reduction in total acreage in no way mitigated the property owners’ concerns, since most of the proposed areas were still immediately adjacent to their properties and located between private piers. As in 2016, the Staff recommended denial of the permits. However, the Staff made a recommendation that if the Commission were to vote against its recommendation and approve the permits, that it should only approve a very small sub-area that was not immediately adjacent to anyone’s property or pier.

Mr. James was present at the hearing and gave a lengthy and very detailed presentation discussing the history of his oyster lease applications up and down the coast, many of which have been denied. He stated that there are no published guidelines indicating how far away shellfish leases must be from docks, so he picked a distance of 25 feet when requesting the leases. He also pointed out that this area is a working waterfront that historically supports crabbing and shellfish farming, and that this industry adds value to the community.

Several property owners were present at the meeting, although they were not represented by counsel. The protestors were represented by three speakers who testified that all of the prior objections which had resulted in the denial of Mr. James’ 2016 were still valid and applicable.

Commissioner Bowman told Mr. James that the Virginia Code requires the Commission to take the rights of private property owners into consideration. He acknowledged that there are multiple other shellfish leases in the area, but pointed out that none of those leases directly abut private property. He sympathized to some degree with Mr. James’ difficulty in finding unleased shellfish ground, but opined that this was not the right location for such a lease.

Commissioner Bowman then differentiated these applications from the Milford Haven permit that the Commission approved last month. In that case, which is still pending before the Army Corps of Engineers, numerous property owners represented by our team expressed concerns about floating aquaculture cages near their property. Chairman Bowman claimed that in Milford Haven there existed a sufficient buffer between private property and the lease area, but in this case there was no buffer at all. (read more about the highly controversial Milford Haven case here)

Associate Commissioner Zydron commented that the VMRC Staff and the Commission puts a great deal of effort into making decisions, and that Mr. James was essentially asking them to decide again something that had already been decided. He recommended standing fast to the previous decision to deny the permits, comparing it to the legal concept of stare decisis, which literally means “to stand by the thing decided.”

However, Associate Commissioner Ballard cautioned the Commission against using stare decisis and against applying a blanket rule against permitting leases between existing piers. He said that each case is different and must be evaluated on its own merits. He also pointed out that the waterfront is a dynamic environment where conditions frequently change, and that such changes may require the Commission to reconsider its earlier decisions in some cases. Of note, Mr. Ballard is a prominent businessman in the Virginia shellfish industry. Our proprietary data indicates that in 2018 he has voted in favor of shellfish leases 75% of the time. However, it should also be noted that Mr. Ballard was one of the Associate Commissioners who voted for the property owners and against the lease applicant in the highly controversial Milford Haven hearing last month.

The first of Mr. James’ two new lease applications was unanimously denied. However, Mr. James did get a small victory on his second new application. Associate Commissioner Lusk, who is also prominent in the Hampton Roads shellfish industry, and who (according to our proprietary data) has voted in favor of lease applicants 80% of the time, made a motion to approve the second application but only for an area of .16 acres which did not directly border anyone’s private property. This motion was put before the Commission and approved 5-4.

Audio of the meeting is available at http://mrc.virginia.gov/calendar.shtm.