Forks of the Patuxent Improvement Ass'n v. National Waste Managers/Chesapeake Terrace

Opinion by Kehoe, J. This judicial review action is the latest episode of a prolonged effort by National Waste Managers/Chesapeake Terrace (“National”) to construct and operate a rubble landfill on a large tract of land near Odenton, Maryland. In 2013, National applied for a variance to extend the time period for obtaining construction permits for the project. The variance application found its way to the Anne Arundel County Board of Appeals. The Forks of the Patuxent Improvement Association, Inc. (the “Association”), as well as several individuals, opposed the variance.

Four members of the Board participated in the hearing. After the hearing, the Board was evenly divided: two members of the Board (the “Approving Members”) were in favor of granting the application and two members (the “Denying Members”) voted to deny it. The Board concluded that the evenly-divided vote constituted a denial and entered an administrative order to that effect. National filed a petition for judicial review in the Circuit Court for Anne Arundel County.

The court concluded that: (1) the evenly-divided Board decision had the effect of denying the application; (2) the court’s focus should be on the reasoning and findings of the Denying Members because their decision was dispositive on the application; and (3) the Denying Members applied erroneous standards to the evidence. The court set out its view of the appropriate legal standards, ³⁵³ vacated the Board’s decision, and remanded the matter to the Board for further proceedings consistent with its opinion. The Association 1 appealed the court’s judgment and poses one issue, which we have re-worded: Did the Board’s evenly-divided 2-2 vote constitute a denial of National’s application for a variance? National filed a cross-appeal and presents three questions, which we have consolidated and re-phrased: Did the circuit court err in vacating and remanding the Board of Appeals’ decision rather than reversing the Board’s decision and ordering the Board to approve the variance application?

As we will explain, we agree with the circuit court’s conclusions that the case must be remanded but see the relevant legal issues somewhat differently than did the circuit court and the members of the Board. Therefore, we will vacate the court’s judgment and remand this case for further proceedings consistent with this opinion. Background National owns a 481-acre tract of land in Anne Arundel County (the “Project Site”). In 1993, National applied for and received a special exception and variances from the Board to construct and operate a rubble landfill and a sand and gravel operation on the Project Site.

The Board’s approval was affirmed by the Court of Appeals in Halle v. Crofton Civic Ass’n, 339 Md. 131 , 661 A.2d 682 (1995). After obtaining the zoning approval, National had 18 months to obtain a construction permit for the project; if it failed to do so, the special exception would lapse, unless it obtained a variance for an ³⁵⁴ extension of time. See Anne Arundel County Code § 18-16-405. 2 In order to obtain a construction permit from the County, National needed a solid waste refuse disposal permit from the Maryland Department of the Environment (the “MDE”). The MDE’s review process for such permits consists of five phases.

In summary, the phases are as follows: 1. Phase I centers on gathering basic information, such as the project’s intended objectives, location, etc. This phase also gathers and compiles existing data about the site. The MDE circulates this information to various local, State, and Federal agencies for review and comment and to determine whether the site is suitable for the intended use. See CO-MAR 26.04.07.14. 2.

Phase II consists of a hydrogeological investigation. The applicant is required to identify and analyze groundwater and geological conditions on the site. This report is also sent to local, State, and Federal agencies for review and comment. See COMAR 26.04.07.15. 3.

Phase III entails engineering design. This phase takes all of the information gathered, especially the hydrogeological information from Phase II, and designs a landfill with these considerations in mind. See COMAR 26.04.07.16. ³⁵⁵ 4. Phase IV is a review stage.

The MDE uses this period to review all the information from Phases I—III to ensure that all of the statutory and regulatory requirements have been met. It then begins to prepare any and all documents it will need to present to the public on the proposed permit. During this phase, the MDE also drafts a proposed permit for the site. 5. Phase V is the public comment stage.

The MDE advertises and holds a hearing on the draft permit and invites the public to submit comments on the proposal. After the public comments are received, the MDE engages in a final review, and then either issues the permit as is, issues it with modifications, or denies the permit. National began this process in 1991, in conjunction with its then-pending application for a special exception. In 1994, however, the MDE suspended review because the County had amended its Solid Waste Management Plan to omit any reference to the Project Site. 3 Litigation between National and the County on the amendment culminated in National’s favor by means of an unreported decision of a panel of this Court in National Waste Managers, Inc. v. Anne Arundel County, No. 810, September Term, 1997, filed March 25, 1998 (“National I”).

The County then took the position that National’s special exception permit had lapsed pursuant to a prior version of what is now County Code § 18-16-405. This resulted in another lawsuit, which was also finally resolved in National’s favor by our decision in National Waste Managers, Inc. v. Anne Arundel County, 135 Md.App. 585 , 763 A.2d 264 (2000) (“National II”). 4 In National II, we held that the 18-month time limit in what is now County Code § 18-16-405 was tolled during the pendency of the litigation between National and the County. Id. at 614, 763 A.2d 264 . ³⁵⁶ In 2001, MDE resumed its process of reviewing National’s proposal. MDE was unable to complete its review within the 18-month period set out in County Code § 18-16-405. 5 Therefore, National filed for a variance for an extension of time to begin construction in 2008.

In 2004, the variance was granted. The Board of Appeals found that exceptional circumstances, namely MDE’s ongoing review of the Project Site, made it impossible for National to implement the previously approved special exceptions and variances within the allotted time and that an extension of two years was the minimum necessary to afford relief to National. Between 2004 and 2013, National filed three more variance applications for extensions of time, each based upon assertions that, although it had pursued its permit from MDE with due diligence, the agency had been unable to complete its review and approval process. The Board of Appeals approved the first two variance requests in 2006 and 2011.

The extension granted in 2011 expired on January 3, 2013. In its current variance application, National sought an additional two year extension to obtain the necessary permits. An administrative hearing officer granted the application after a public hearing. The County Code provides that aggrieved persons may appeal an AHO’s decision to the Board, which conducts its own de novo proceeding.

County Code § 18-16-402. Appellants filed such an appeal. The Board’s hearing in this case began on June 6, 2013 and was completed on October 15th of that year. The Board issued an evenly divided 2-2 decision on December 27, 2013.

The Approving Members voted to grant the application and the Denying Members voted to deny it. After summarizing the evidence presented to the Board, and explaining the differing conclusions that each group drew from that evidence, the Board concluded: ³⁵⁷ The legal effect of the inability of the Board to reach a majority is that [National] did not meet [its] burden of persuasion and the request for variances for time extension must be denied. When an appeal of this nature is placed before the Board, it is heard de novo, and the burden of proof and persuasion is placed upon [National]. See Montgomery County Board of Appeals v. Walker, 228 Md. 574 , 180 A.2d 865 (1962); Lohrmann v. Arundel Corp., 65 Md. App. 309 , 500 A.2d 344 (1985).

If a majority is not persuaded upon substantial evidence, the application must be denied. Id. National filed a petition for judicial review of the Board’s decision in the circuit court. It presented a variety of arguments to the circuit court, but only two of them are relevant to the current appeal: (1) whether the Board’s evenly-divided vote had the legal effect of denying National’s application; and (2) whether the Denying Members applied the correct legal standard in assessing the evidence.

On the first issue, the circuit court concluded that the Board’s 2-2 vote constituted a denial of the application. However, on the second issue, the court concluded that the Denying Members relied on an erroneous legal standard. Thus, the court vacated the Board’s decision and remanded the case for reconsideration. The Association has appealed, and National cross-appealed, the circuit court’s judgment.

Analysis Standard of Review When this Court reviews the final decision of an administrative agency, we “look through” the circuit court’s decision, and, although applying the same standards of review, independently evaluate the agency decision. People’s Counsel for Baltimore County v. Surina, 400 Md. 662, 681 , 929 A.2d 899 (2007). In this exercise, our review is “limited to determining if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and to determine if the administrative decision is premised upon an erro ³⁵⁸ neous conclusion of law.” Id. at 682 , 929 A.2d 899 (citation and quotation marks omitted). Finally, “[a] reviewing Court may not uphold the agency order unless it is sustainable on the agency’s findings and for the reasons stated by the agency.” Eastern Outdoor Advertising Co. v. Mayor & City Council of Baltimore, 128 Md.App. 494, 516 , 739 A.2d 854 (1999) (quotation marks and citation omitted).

I. The Association contends that the Board’s 2-2 evenly-divided vote on National’s application had the legal effect of denying National’s variance application. The Association relies on this Court’s decision in Lohrmann v. Arundel Corp., 65 Md.App. 309 , 500 A.2d 344 (1985) for support. We agree that our prior decision is dispositive as to the legal effect of an evenly-divided decision by an administrative agency. Lohrmann was not a judicial review proceeding but rather was an appeal from a declaratory judgment to the effect that an evenly-divided decision of the Anne Arundel County Board of Appeals left the decision of the administrative hearing officer in effect.

Id. at 311-12 , 500 A.2d 344 . In our analysis, we began by noting that, pursuant to the County’s charter, the Board of Appeals exercises original de novo jurisdiction over all matters that come before it. Id. 6 We concluded that, because the Board was exercising original jurisdiction: [i]t was as though the zoning officer had made no decision. In that situation, [the applicant] had the same burden it had before the zoning officer—“the burden of proof (including the burden of going forward with the evidence and the burden of persuasion) of all questions of fact.” [County Code] § 13-341.2(a)_The evenly-divided Board decision demonstrates that it did not meet that burden.

Accordingly, the effect of the Board’s action was to deny [the applicant’s] request for a special exception. ³⁵⁹ Lohrmann, 65 Md.App. at 319-20 , 500 A.2d 344 (citation omitted, emphasis added). In its cross-appeal, National asserts that Lohrmann is not controlling because “the Court of Appeals on two occasions addressed cases involving ‘split votes’ in de novo appeals to Boards of Appeal, from decisions of zoning hearing officers.” National cites Levy v. Seven Slade, Inc., 234 Md. 145 , 198 A.2d 267 (1964) and Stocksdale v. Barnard, 239 Md. 541 , 212 A.2d 282 (1965), in support of this proposition. National concedes, however, that the Lohrmann Court distinguished both Levy and Stockdale because in neither case “was an issue raised as to the effect of a split decision on a de novo administrative appeal. No doubt for that reason the Court of Appeals did not address that issue, instead of treating the cases as though they involved non-de novo appeals.” Lohrmann, 65 Md.App. at 316 n.3, 500 A.2d 344 .

Lohrmann’s scholarly and well-reasoned analysis is as cogent today as it was when the opinion was filed more than thirty years ago. We see no reason to depart from our long-established holding. Because the Denying Members prevailed in rendering their decision on National’s application, it is their factual findings and conclusions of law that we will review in determining whether the Board erred in denying the application. See Mombee TLC, Inc. v. Mayor and City Council of Baltimore, 165 Md.App. 42 , 884 A.2d 748 (2005) (“[N]o principled legal distinction can be drawn between what is required of a prevailing majority in rendering its decision and that which is required of a prevailing minority in imposing its will _Therefore, ... just as a prevailing majority must do, a prevailing minority must ... issue findings of fact and conclusions of law.”).

We now turn to what is the dispositive issue in this case, namely, whether the Denying Members’ decision was supported by a “reasonable basis in fact” and was not arbitrary or capricious. ³⁶⁰ II. Our analysis begins with County Code § 3-1-207, which sets out the criteria by which the Board is to decide whether to issue a variance. The statute states in pertinent part: (a) Generally. The Board of Appeals may vary or modify the provisions of Article 18 of this Code when it is alleged that practical difficulties or unnecessary hardships prevent carrying out the strict letter of that article, provided the spirit of law shall be observed, public safety secured, and substantial justice done.

A variance may be granted only upon an affirmative finding that: ⅜ ⅜ ⅝ ⅜ (2) because of exceptional circumstances other than financial considerations, the grant of a variance is necessary to avoid practical difficulties or unnecessary hardship, and to enable the applicant to develop the lot. * * * * (e) Required findings. A variance may not be granted under subsection (a) or (b)[ 7 ] unless the Board finds that: (1) the variance is the minimum variance necessary to afford relief; (2) the granting of the variance will not: (i) alter the essential character of the neighborhood or district in which the lot is located; (ii) substantially impair the appropriate use or development of adjacent property; (iii) reduce forest cover in the limited and resource conservation areas of the critical area; (iv) be contrary to acceptable clearing and replanting practices required for development in the critical area or bog protection area; or (v) be detrimental to the public welfare.[ 8 ] ³⁶¹ As the applicant, National “has the burden of proof, including the burden of going forward with the production of evidence and the burden of persuasion, on all questions of fact.” County Code § 18-16-301. The Denying Members found that: (1) there were no “exceptional circumstances that would create practical difficulties or unnecessary hardship for [National] to develop the lot within the time frames previously granted by the Board” because National had not been diligent in pursuing the MDE application; (2) the two year variance requested by National was insufficient to complete the review process with MDE and obtain final County permits; and (3) the prolonged uncertainty created by the application, already pending for 12 years, has negatively affected the surrounding community and “[b]y allowing further time extensions, this project, which has no end in sight, will continue to burden this community and alter the essential character and development of the surrounding neighborhoods.” In its brief, the Association asserts that Lohrmann requires reversal of the circuit court’s judgment because “the evenly-divided Board of Appeals decision means that [National] did not meet its burden of proof or persuasion[.]” For its part, National contends that the Denying Members’ findings were entirely unsupported by evidence in the record, were irrelevant, or both. In addressing these contentions, we will examine each of the bases that the Denying Members relied on in arriving at their conclusion and in so doing will address: (1) the weight the Board should give to National’s “due diligence,” or the lack ³⁶² thereof, in deciding whether exceptional circumstances exist that have created practical difficulties for National’s development of Project Site; (2) the meaning of the requirement that the variance be the “minimum necessary to afford relief;” and (3) the proper frame of analysis to determine whether granting the variance would either “alter the essential character of the neighborhood,” or “substantially impair the appropriate use or development of adjacent property[.]” Diligence On January 3, 2011, the Board granted a variance which allowed National two additional years, that is, until January 3, 2013, to obtain the necessary permits.

The Denying Members concluded that National failed to demonstrate that it would suffer unnecessary hardship because it had failed to diligently pursue its approvals in this period. The evidence before the Board was mixed. At the hearing, National called Edward Dexter, the chief of MDE’s landfill review program, as a witness. Dexter testified that the period of time MDE took to review landfill applications varied, “but usually ... three to seven [years] is typical.” Although his testimony was guarded as to the specifics, Dexter indicated that a previous environmental consultant hired by National to coordinate its application process had not been entirely satisfactory but that National had hired a different consultant shortly after the Board granted the 2011 variance.

Veronica Foster, a registered civil engineer who is the current “team leader” for National’s efforts to obtain the MDE permits, testified that the prior team leader retired in 2011 “for a number of reasons, including his health.” A letter dated December 20, 2012 from Dexter to National’s counsel stated that “[o]ver the last year, ... National has been actively pursuing this application.” Foster took charge of the project in January, 2012. Additionally, Dexter testified that National had, “generally speaking,” been diligent in pursuing approval since 2001. With regard to the past two years, Dexter further testified that National had “been aggressively pursuing” the project. ³⁶³ John Fury, a member of the County’s planning staff, prepared a report for the Board’s use in the variance hearing.

The report stated that “[i]t is evident that the applicant has been diligently pursuing project approval through the [MDE] since the original special exception and variance approvals were granted in 1993.” None of this evidence was contradicted or challenged by the opponents to the variance. Even so, the Denying Members were not convinced. Their opinion identified two reasons for their conclusions. First, the Denying Members identified what they saw as a pattern of foot-dragging on National’s part in response to requests for additional information from MDE: [National] received a letter from MDE on March 3, 2011 raising 28 specific items. [National] did not respond until over a year later on March 22, 2012.

MDE responded on July 19, 2012 with a request to supplement data from 2004. [National] did not meet with MDE until September 2012 and it took until March 1, 2013 to receive approvals to begin the process necessary for [National] to supply MDE with additional information requested. Second, the Denying Members referenced National’s failure to pursue the remaining County permits while MDE’s review was on-going. National had the burden of production and persuasion. Our assessment of the evidence before the Board is that National met its burden of production, but that National’s failure to pursue the County permits at the same time as it was seeking the MDE approvals was a basis from which a fact-finder could conceivably conclude that National had not been diligent in pursuing the permits with MDE in 2011.

Nonetheless, the Denying Members’ conclusion was problematic because it did not connect any lack of diligence on National’s part with the unnecessary hardship standard under County Code § 3-1-207(a)(2). A lack of diligence in itself is insufficient to conclude that National did not face an unnecessary hardship. A lack of diligence is relevant only if National could have obtained the permits within the 2011-2013 time ³⁶⁴ period if it had acted diligently. The Denying Members did not address this issue.

The Minimum Variance Necessary The Denying Members concluded that a variance for an additional two years was not the minimum variance necessary to grant relief to National. They reasoned that, if the past is an accurate predictor of the future, National will have neither MDE nor final County approval within two years. Therefore, they reasoned, the application failed to satisfy County Code § 3-l-207(e)(l)’s requirement that the Board grant only the minimum variance necessary to afford relief to the applicant. We disagree with the Denying Members’ interpretation of the “minimum variance necessary” requirement