If you think land use is simple, read Beverly Port Marina, Inc. v. Department of Environmental Protection — not just the recent Appeals Court decision but the underlying agency decision.  What’s so difficult?  Begin with a smorgasbord of government laws and programs:  Chapter 91, the Coastal Zone Management Plan, procurement law, the urban self-help program, Article 97 of the Massachusetts Constitution.  After you’ve had your fill, throw in the dessert:  capitalism.  At its heart, Beverly Port Marina concerns the extent to which governmental programs (not just one, but many) determine which development proposals stay on the serving table, and which go in the garbage can.I'll drink to that.jpg 

The setting is Glover’s Wharf in Beverly.  Glover’s Wharf lies within a Designated Port Area (DPA) established in 1978.  It also lies seaward of the historic high water mark.  In other words, it’s within the jurisdiction of Chapter 91, the Public Waterfront Act.  In 1996, the city, aided by a grant from the Division of Conservation Services (DCS) urban self-help program, bought Glover’s Wharf.  The grant required the city to execute a project agreement with DCS.  The agreement described the city’s plan to lease a building for use as a restaurant, to maintain public boat slips, and to provide public parking.  The agreement acknowledged that the land was subject to Article 97, which requires a two-thirds vote of the Legislature before lands acquired for park (or similar) purposes can be put to a different use.

In 2006, the city issued a Request for Proposals (RFP) pursuant to the procurement law, M.G.L. c. 30B.  The RFP sought proposals for a 20- to 40-year ground lease to redevelop Glover’s Wharf for restaurant and conservation/recreation uses.  The “Black Cow” restaurant chain proposed a 40-year ground lease for a two-story building with a 362-seat restaurant, as well as parking for the restaurant and existing marina slips.  It also suggested that the DPA be rescinded.  The city went with the Black Cow proposal and, within two years, applied to the state Department of Environmental Protection (DEP) for Chapter 91 license. Instead of trying to rescind the DPA, the city proposed water-dependent industrial uses, including commercial passenger vessel service, for the first floor of the proposed building.

In response to the Chapter 91 application, Beverly Port Marina, Inc. (BPM) proposed a “competing project” pursuant to 310 CMR 9.36(5)(a).  That regulation prevents DEP from licensing nonwater-dependent or non-industrial uses within a DPA where it determines that the tidelands “are necessary to accommodate a competing party who intends to develop such tidelands” for water-dependent industrial use.  The competing party must show that its project promotes water-dependent-industrial use to a greater degree than the project proposed in the license application; must prepare development plans for its project, including a feasibility study; and must offer to purchase title or other rights to the tidelands in question at fair market value.  BPM’s proposal was for a 40-year ground lease that would net the city $400,000 over the Black Cow proposal.  It would use the land for a boatyard, boat repairs, and recreational uses in the existing building, and would use of the adjacent pier for commercial fishing, a research vessel, and recreational boating.

DEP granted the city a Chapter 91 license for the Black Cow proposal.  BPM appealed.  On appeal, DEP’s regional office changed its tune in favor of BPM.  Nonetheless, DEP’s presiding officer, and ultimately its commissioner, granted the city a license for the Black Cow proposal on grounds that BPM did not show that its proposal was feasible because it did not or could not meet various governmental requirements — namely, it did not show (adequately) that its proposal was allowed under DCS’s project agreement, that the city would lease the land to BPM, or that the project satisfied Article 97.  The superior court upheld DEP’s decision.  The Appeals Court did not.

In reaching its contrary conclusion, the Appeals Court breathed life into an oft-cited but usually ineffectual principle:  although an agency is owed deference, a court must not abdicate its responsibility to determine the meaning of a regulation as a matter of law.  The court held that the “competing project” regulation does not require a proponent to establish conclusively that it will obtain all permits and approvals for its project.  But the court went one step further.  It noted that DEP’s review of a Chapter 91 license application “ought not inquire into the applicant’s acquisition of other permits necessary for the project.”  Logically, the same could be said about any review by a permitting agency.

In a free-market economy, government should not determine which projects succeed and which fail.  Of course, in some ways government does this all the time.  A decision to grant or deny a permit determines if a project succeeds or fails.  So do decisions to provide (or not provide) subsidies like tax credits, grants, and so on.  But the Beverly Port Marina situation is different.  If DEP’s decision were upheld, it would have set a precedent whereby one government agency could base its permitting decision on what it thinks another government agency would do.  Whatever deference is owed to an agency, it does not extend to reading tea leaves or divining the meaning of cracks in a tortoise shell. As for Article 97 or any other legislative act, the Fates themselves cannot foretell what the Legislature will do.

Some of my peers disagree with the Appeals Court’s decision.  They emphasize BPM’s failure to respond to the city’s RFP and its lack of any agreement with the city.  Those are fair points.  Most permitting programs require evidence of site control — although, when these rights are questioned, courts have rightly decided that the resolution of a property dispute is not within an agency’s expertise.  See, for example, the Appeals Court’s 1980 decision in Tindley v. Department of Environmental Quality Engineering.  DEP’s “competing project” regulation does not require evidence of site control.  But even if it did, should a municipality or state agency be allowed to issue an RFP that targets a certain type of project (in this case, a restaurant), and thereby excludes the types of projects meant to be developed within a DPW?  There aren’t many municipalities looking for an industrial use, such as a tank farm, over a seaside steak-and-lobster joint.

It may be that DEP’s “competing project” regulation is unworkable.  Rather than tempt DEP into the quicksand of determining the feasibility of one project over another, it makes more sense to offer incentives (such as tax credits) to foster the type of industrial development meant for DPAs.  Beverly Port — the first case to address the “competing project” regulation — reveals the pitfalls of asking an agency to forecast the result of competition.  More broadly, Beverly Port serves as a well-founded restraint on agency decision-making by branding unreasonable any attempt to base a permitting decision on the possible (or even likely) outcome of an application for a different permit or approval before a different agency.  In a regulatory environment where the government has more layers than a royal wedding cake, this is an important precedent.