Beverly Port Marina, Inc. v. Comm'r of the Dep't of Envtl. Prot.

84 Mass.App.Ct. 612

999 N.E.2d 492

BEVERLY PORT MARINA, INC.

v.COMMISSIONER OF the DEPARTMENT OF ENVIRONMENTAL PROTECTION & another.¹

No. 12–P–2010.

Appeals Court of Massachusetts, Essex.

Argued Sept. 12, 2013.

Decided Dec. 11, 2013.

Adam J. Brodsky, Hingham, for the plaintiff.

Louis M. Dundin, Assistant Attorney General, for Department of Environmental Protection.

Richard A. Nylen, Jr., Boston, for city of Beverly.

Present: GREEN, GRAINGER, & FECTEAU, JJ.

Opinion

GREEN, J.

Under the regulations governing issuance of licenses under G.L. c. 91 for projects on filled tidelands, a license may not issue for a project proposed in a “designated port area” (DPA) if a proposal for a “ competing project” submitted during the public comment period on the license application would promote water-dependent industrial uses of the project site to a greater extent than the project proposed in the license application. See 310 Code Mass. Regs. § 9.36(5)(a) (1994). During review by the Department of Environmental Protection (DEP) of an application by the city of Beverly (city) for licenses authorizing, inter alia, construction and operation of a restaurant on a waterfront site, the plaintiff, Beverly Port Marina, Inc. (BPM), submitted a proposal to, inter alia, build and operate a boatyard on the site instead. A DEP hearing officer (presiding officer) concluded that BPM's submission failed to demonstrate that its proposal was feasible, and recommended issuance of the licenses, with conditions, for the city's proposed project. The DEP commissioner adopted the recommended decision, and BPM appealed the decision to the Superior Court, where a judge affirmed the decision on cross motions for judgment on the pleadings. We conclude that BPM's competing proposal adequately satisfied the criteria established by the applicable regulations, and we vacate the judgment.

Background. The site at the center of the controversy among the parties is a parcel owned by the city known as “Glover's Wharf,” located along the Beverly waterfront. The site is at the westernmost end of a DPA established in 1978 under the Massachusetts Coastal Zone Management Plan. See 301 Code Mass. Regs. § 20.03 (1979); 310 Code Mass. Regs. § 9.24(2) (1979). The city also owns an adjacent parcel, Ferry Way Landing, farther west of the site, outside the DPA. BPM owns a parcel to the east of the site, within the DPA, on which it operates a marina and boatyard.

From the 1970s until 1995, Glover's Wharf was occupied by a McDonald's restaurant.² After the restaurant closed, the city purchased the site, with partial funding assistance from the urban self-help program administered by the division of conservation services (DCS) within the Executive Office of Environmental Affairs, pursuant to St. 1977, c. 933, as amended through St. 1984, c. 233, § 3.^{3 , 4} In order to obtain funding for its purchase of the site, the city entered into an agreement with DCS (project agreement), which described the city's plan to lease the former McDonald's building for use as a restaurant, to maintain and rent to the public a number of boat slips in the adjacent harbor, and to provide public parking for visitors to the waterfront.⁵ The project agreement provided that the Commonwealth would reimburse the city $483,600 for acquisition of the land. Paragraph 4 of the agreement provides:

“The [city] acknowledges Article 97 of the Massachusetts Constitution which states, in part, that: ‘Lands ... acquired for such [park, recreation or conservation] purposes shall not be used for other purposes or otherwise disposed of except by laws enacted by a two-thirds vote ... of the General Court.’ The [city] hereby agrees that any property or facilities comprising the project will not be used for purposes other than those stipulated herein or otherwise disposed of unless the [city] receives the appropriate authorization from the General Court, the approval of the secretary of Environmental Affairs, and any authorization required by the provisions of M.G.L. c. 40, s. 15A.”

Since its purchase of the site in 1996, the city has used the site for parking, for public access to the waterfront, and as a park. The former McDonald's building was used briefly as a homeless shelter. The city also operated a recreational marina until 2005, when its c. 91 license for that use expired.

In 2006, the city issued a request for proposal, soliciting proposals for a long-term lease of the site for operation of a commercial restaurant, together with conservation and/or recreational uses. A restaurant chain, the Black Cow, submitted a proposal that included a forty-year ground lease, at an annual rental of $50,000, and replacement of the existing vacant building with a two-story, 7,000–square–foot building to house a 362–seat restaurant.⁶ The Black Cow proposal also expressed a need for sixty-seven on-site parking spaces to serve the proposed restaurant, and twenty-eight parking spaces to serve the marina slips. The Black Cow proposal suggested rescission of the DPA applicable to the project site.

In October, 2008, the city submitted a c. 91 license application to DEP to pursue the Black Cow proposal. Rather than seeking rescission of the DPA, however, the city's application proposed water-dependent industrial uses (including commercial passenger vessel operations) to occupy the first floor of the proposed new building. The city submitted a separate application for a license to convert two bottom-anchored base floats to permanent pile-supported floats, along with a ramp for access to the floats.

BPM submitted comments objecting to both of the city's proposals. As to the Black Cow project, BPM asserted that it was inconsistent with c. 91 regulatory requirements for projects within a DPA. On December 23, 2008, BPM also timely submitted a proposal for a “competing project,” pursuant to 310 Code Mass. Regs. § 9.36(5)(a) (1994).⁷ In its proposal, BPM proposed to lease the site for forty years at an annual rental of $60,000, and to use the site as a boatyard and to perform boat repairs, with recreational uses in the former McDonald's building, and use of the adjacent pier for commercial fishing and a research vessel, as well as recreational boats. BPM included with its submission a feasibility study prepared by Quantum Associates. The feasibility study generally concluded that BPM had the financial capacity and expertise to carry out its proposed use of the site, and that the market for the services BPM proposed to offer was adequate to support the proposal. However, the last paragraph of the feasibility study was inconclusive on the question whether the proposed project would comply with the requirements imposed by the project agreement (presumably, the art. 97 restrictions).⁸ Subsequently, by letter dated March 25, 2009, Melissa Cryan, the EOEEA grant manager, informed BPM that its proposal to use the ground floor of the former McDonald's building for recreational purposes, such as charter fishing and boat rentals, would conform to the requirements of the project agreement, and that its plan to provide a minimum of six parking spaces year-round for outdoor recreation purposes would also conform to the project agreement.⁹

On March 1, 2010, DEP waterways permitting staff issued their first “Written Determination,” disqualifying BPM's proposal because it had not complied with the provisions of G.L. c. 30B. The determination also indicated DEP's intent to issue the requested licenses to the city. The city then moved to dismiss BPM's proposal from consideration. In response, DEP's senior counsel, upon further consideration, concluded that compliance with c. 30B was not a prerequisite to consideration of competing proposals under 310 Code Mass. Regs. § 9.36(5)(a),¹⁰ and requested that the presiding officer remand the matter in order for DEP waterways permitting staff to evaluate BPM's proposal further. The matter was accordingly remanded, and in a September 3, 2010, “Revised Written Determination,” DEP's waterways staff found that BPM's proposal met all of the criteria of § 9.36(5)(a) and that it “promotes water-dependent industrial use to a greater extent than the proposed project.” The waterways staff concluded, therefore, that the city's project was not eligible for licensing. In this posture, the matter went to hearing.

Following the hearing, and after receipt of the parties' closing briefs, the presiding officer, in an electronic mail message to DEP staff, requested staff to reconcile the requirements of the project agreement, that the site be dedicated to recreational uses, with the waterways regulations, requiring that land within DPAs be dedicated to water-dependent industrial uses. DEP senior counsel responded that the waterways regulations did not require DEP to consider compliance with other laws, unless specifically mentioned in the regulations, and that the urban self-help grant did not appear in the waterways regulations. Counsel therefore concluded that DEP “should [neither] take any further action [n]or perform any further analysis with regard to the Urban Self–Help Grant,” and that “[s]uch analysis or testimony does not pertain to any of the identified issues in this case and is legally irrelevant to any regulations ... which are applicable to this project.” He further observed that, in any event, “[o]n information and belief, DCS staff has verbally communicated to DEP that both [the city's and BPM's] projects appeared feasible from [DCS's] standpoint.” Lastly, counsel commented, “If this issue were legally relevant, fairness would require the reopening of the hearing with opportunity for testimony and argument by all parties. It does not relate to any of the stated issues [in the prehearing scheduling order].”¹¹

Thereafter, the DEP presiding officer prepared a detailed written “recommended final decision,” expressing her conclusion that BPM had failed to demonstrate that its competing proposal was feasible, and that its failure in that...