Photo by Larry Dikeman

STATE OF MICHIGAN

DEPARTMENT OF ENVIRONMENTAL QUALITY

OFFICE OF ADMINISTRATIVE HEARINGS

SUBJECT: Part 301, Inland Lakes and Streams and Part 353, Sand Dunes Protection and Management, of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended (NREPA)
Petition of Dune Harbor Estates, LLC
File No. 00-61-0039-P

PROPOSAL FOR DECISION

Dated: February 24, 2004 Richard A. Patterson
Administrative Law Judge
This contested case involves an application of Dune Harbor Estates LLC (Dune Harbor) that has two components. The first is for a permit under Part 301 (MCL 324.30101 et seq.). Specifically, the application proposes to install a water level control device in an artificial body of water that has resulted from sand mining operations conducted by Dune Harbor's related entity, Nugent Sand. The second component involves an application for special exception under Part 353 (MCL 324.35301 et seq.) to place on outfall in a critical dune area on the shore of Lake Michigan.
During the application review process the proximity of the outlet to Lake Michigan gave rise to consideration of the outfall under the regulatory provisions of Part 325, Great Lakes Submerged Lands, of the NREPA (MCL 324.32501 et seq.). However, as is apparent from the evidence summarized and analyzed below, none of the proposed activity is to be conducted below the ordinary high water mark (OHWM) of Lake Michigan. In fact, in its post-hearing pleadings, the Geological and Land Management Division (GLMD) abandoned its argument that a Part 325 permit was required.

JURISDICTION
Part 301 grants the right to a contested case hearing to a person who "is aggrieved by any action or inaction of the department." MCL 324.30110(2). Part 353 grants a similar right to a person who "is aggrieved by a decision of the department in regard to the...denial of a...special exception." MCL 324.35305(1). Dune Harbor exercised its right under these statutory provisions by timely filing a petition for a contested case hearing. Consistent with these provisions the hearing was conducted in the manner provided for in the Michigan Administrative Procedures Act, 1969 PA 306, as amended. MCL 24.201 et seq.

PROPERTY RIGHTS PRESERVATION ACT CONSIDERATION
Pursuant to the Property Rights Preservation Act, 1996 PA 101, MCL 24.421, et seq., in formulating this Proposal for Decision (PFD) the undersigned has reviewed the Takings Assessment Guidelines and considered the issue of whether this government action constitutes a constitutional taking of property.

PARTIES
Dune Harbor is represented by William C. Fulkerson and Rodrick W. Lewis, Warner, Norcross and Judd, LLP. Dune Harbor presented the testimony of Robert Chandonnet, President of Nugent Sand and owner of Dune Harbor; John Nevedal, Vice President of Operations, Nugent Sand; David A. Stebbins, Landscape Architect, and Development Director for Dune Harbor Development; Scott R. Bazinet, Lowe Construction Company; Alan W. Hinks, hydrogeologist; Arthur Nash Jr., former Deputy Director, Department of Environmental Quality (DEQ); Thomas R. Bennett and Stuart Kogge, principals of Wetland and Coastal Resources; and Dennis Dunlap, registered civil engineer and licensed land surveyor.
The professional staff of the GLMD is charged with the day-to-day implementation of Parts 301 and 353. Representing the GLMD is John Fordell Leone, Department of Attorney General. The GLMD presented the testimony of Douglas Daniels, field inspector for the sand mining program administered by the GLMD; Michelle Hohn, James Fortney, and Mathew Warner, Environmental Quality Analysts, GLMD; Guy A. Meadows, Ph.D., Director, University of Michigan Ocean Engineering and Marine Hydrodynamics Laboratory; and Alan F. Arbogast, Ph.D., Associate Professor of Geography at Michigan State University.
The hearing in this matter was held on July 8 through 11, and July 16 and 17, 2003. During the hearing Dune Harbor introduced 39 exhibits and the GLMD introduced 7.
Post-hearing filings consisting of written Closing Arguments, proposed Findings of Fact and Conclusions of Law, and Responses culminated on September 22, 2003. The proffered Findings and Conclusions were carefully reviewed and considered in preparing this PFD. Any of those inconsistent with this PFD are rejected as being either contrary to the evidence or law, or unnecessary for the disposition of this matter.

STIPULATIONS
During the pre-hearing conference on April 17, 2003, the Parties stipulated that Dune Harbor is the proper applicant for a permit. In addition, through a Request to Stipulate filed by Dune Harbor and the GLMD's Response, the following stipulations were entered into:
1. The two lakes on the Dune Harbor property were created from upland and authorized under a sand mining operation permitted by the Department of Natural Resources and DEQ permits 80-9-2 and 99-09-0083-P. The activity is also authorized by sand dune mining permit No. Nus-LAS-A4.
2. The land which is subject to the present Part 301 permit application is within a sand mining area authorized under permit No. Nus-LAS-109-A4.
3. The two subject inland lakes are not connected by a navigable means to navigable waters.
4. The ordinary high water mark elevation of Lake Michigan is established at 579.8 feet, 1955 IGLD. MCL 324.32502.

While stipulations of law are not binding, In Re Finlay Estate, 430 Mich 590, 595; 424 NW2d 272 (1988), stipulations of fact are sacrosanct. Dana Corporation v Employment Security Commission, 371 Mich 107, 110; 123 NW2d 277 (1963). See also American National Fire Insurance Company v Frankenmuth Mutual Insurance Company, 445 Mich 91, 93; 516 NW2d 52 (1994) (remand required where trial court apparently refused to follow parties stipulation of facts). The Parties stipulations in this case are factual, and as such are legally sustainable and adopted as findings of fact. MCL 24.278.

PREVIOUS OPINIONS AND ORDERS GOVERNING THIS CASE
An Opinion and Order entered on June 24, 2003, that denied Dune Harbor's Motion for Summary Disposition held that because the two lakes involved are not navigable they are not impressed with the public trust. Further, it was held that as artificial bodies of water the lakes do not vest riparian rights in their littoral owners. Ergo, the activity proposed under Part 301 cannot adversely affect either the public trust or riparian rights. As a result, the Part 301 review will be limited to the remaining permitting criterion. MCL 324.30106.
Relative to Part 353, the Order held the term "critical dune area" applies to the immediate area impacted, as opposed to the entire designated geographical critical dune area in which the activity will occur. Finally, it was held that the proposed outlet is not a "structure" absolutely forbidden at any point lakeward of the crest of the first landward ridge of a critical dune area that is not a foredune. MCL 324.35316(2). Subsequently, the GLMD filed a Motion for Interlocutory Review with the Director seeking a reversal of the determination that the outlet is not a "structure". The Director denied the Motion, without prejudice, in an Order entered on July 7, 2003, but preserved the GLMD's right to raise the issue in its Exceptions. In its post-hearing filings the GLMD invites this Tribunal to revisit the finding on whether the proposed outlet is a structure, but offers no different facts or legal argument to change the holding.
Lastly, the June 24, 2003, Order held that a question of fact as to the applicability of Part 325 existed based on the GLMD's refusal to stipulate that none of the proposed activity would be conducted below the OHWM of Lake Michigan. During the hearing Mr. Bennett testified that none of the three designs for the rock plunge pool would be installed below the OHWM. This testimony is confirmed by the drawings of the three designs depicted on Exhibit P-24. The GLMD did not offer any testimony to the contrary, and as noted acknowledges Part 325 is not implicated in its Closing Argument. Therefore, the DEQ lacks jurisdiction under Part 325.

FINDINGS OF FACT
Location and Nature of the Subject Property
Nugent Sand owns 440 acres upon which it has conducted sand mining activities for over 90 years. The site is located in the city of Norton Shores in Muskegon County, approximately 2.5 miles south of the city of Muskegon, and fronts on Lake Michigan. An aerial photograph of the area entered as Petitioner's Exhibit 28 is illustrative. The mining operations have resulted in the formation of two lakes. One of the lakes that will be referred to as South Lake is no longer subject to active mining operations and has been configured pursuant to a reclamation plan as part of the sand dune mining permit. Exhibit P-17. It is around South Lake that Dune Harbor proposes to construct a residential development. A comprehensive site plan for that development was formulated and approved by the city of Norton Shores. A conceptual drawing of phase one of that project is depicted on Exhibit P-21. This plan was predicated upon an estimated static water elevation in South Lake of 582 to 584 feet at the cessation of mining creating a water body of some 120 acres. However, subsequent to the cessation of mining, the water level continued rising, ultimately reaching a level of 592 feet. As a result, the anticipated lots fronting on South Lake would be inundated, unbuildable, and installation of utilities and other infrastructure became problematic.

The Proposed Activity
In order to implement the approved site plan, Dune Harbor seeks a permit under Part 301 to install a control device in the other lake on the site, which will be referred to as North Lake. After connection of the two water bodies is completed that device will control the level of both lakes. It is anticipated the water level of South Lake would be drawn down to a level of 586 feet, approximately 4.76 feet below existing level. The control structure would discharge water to a 36-inch pipe that would be bored and jacked 27 feet on average, below critical dune topography approximately 600 feet to a rock plunge pool on the shore of Lake Michigan. Exhibit P-23. The borders of the critical dune area, the extent of Dune Harbor's property and the location of the proposed pipe and outflow are depicted on map sheets created by GIS and photogrammetry by Mr. Warner of the GLMD. Exhibits R-1, 2, and 3. The installation of the pipe and outflow is regulated under Part 353. The discharge from that pipe was authorized under a National Pollution Discharge Elimination System (NPDES) permit issued on February 4, 2003, by the DEQ, Water Division. The terms and conditions of that NPDES permit are not an issue in this contested case.
The original plan for this activity is depicted in the attachments to the application for permit and special exception entered as Exhibits P-1 and P-2. Two additional configurations for the rock plunge pool were explored during the application review process. See Exhibit P-24. All of these proposals and how they came to be developed are discussed in detail later in this PFD.
The GLMD denied the application for the control device and the rock plunge pool. As to the control device, it determined lowering the lake level would have an adverse impact on the littoral zone. It further determined the rock plunge pool would create a contour change and increase the risk of erosion in the critical dune area. The GLMD also takes the position that two feasible and prudent alternatives are available. The first would be to redesign the project to work around the increased lake level. The second would be to place the end of the discharge pipe underwater on the bottomland of Lake Michigan some distance from the shore.

PART 353 ANALYSIS
Part 353 embodies a regulatory scheme for land features the Legislature has determined are of great importance. MCL 324.35302. While the statute contemplates certain uses on these resources, specific criteria must first be met. MCL 324.35312 through MCL 324.35317. As this statute is an exercise of the authority to regulate land use, a local unit of government has the discretion to assume the regulation of critical dunes within its jurisdiction. MCL 324.35304. However, if a local unit of government declines this legislative grant of authority, as is the situation in this case, the DEQ is charged with administering the statute. MCL 324.35304(3).
Dune Harbor proposes activity within the confines of what has been designated as a critical dune area in the "Atlas of Critical Dunes" pursuant to MCL 324.35301(c). This requires a determination of whether the proposal falls within the scope of following provision of Part 353:
Unless a variance is granted pursuant to section 35317, a zoning ordinance shall not permit the following uses in a critical dune area:
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(d) A use involving a contour change that is likely to increase erosion, decrease stability, or is more extensive than required to implement a use for which a permit is requested.
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(g) A use that is not in the public interest. In determining whether a proposed use is in the public interest, the local unit of government shall consider both of the following:
(i) The availability of feasible and prudent alternative locations or methods, or both, to accomplish the benefits expected from the use. If a proposed use is 1 single family dwelling on a lot of record owned by the applicant, consideration of feasible and prudent alternative locations shall be limited to the lot of record on which the use is proposed. A lot of record shall not be created strictly for the purpose of avoiding consideration of alternative locations under this subparagraph.
(ii) The impact that is expected to occur to the critical dune area, and the extent to which the impact may be minimized.
MCL 324.35316(1).

The previous order referred to above determined the outlet was not a structure and is, therefore, not expressly prohibited. Although the outlet is not a structure, it may be regulated if it is a "use". The term "use" is defined as "a developmental...activity done or caused to be done by a person that significantly alters the physical characteristic of a critical dune area or a contour change done or caused to be done by a person." MCL 324.35301(j). Thus a "use" consists of a two-part disjunctive test. The first component of the test, significant alteration, is not defined in the statute. However, the second part, contour change, is defined as a specified activity that "significantly alters the physical characteristic of the critical dune area...." MCL 324.35301(a).
To determine if a "use" is at issue the proposed activity and its effects to the natural feature must be examined. This project under any of the various configurations involves placement of rock rip rap and metal grates and in some plans, concrete or grout. Any of these designs would result in the replacement of the existing sand surface with an elevated form of impervious surface. Such an activity can only be termed a significant alteration of the dune's physical characteristic. The same configuration constitutes a contour change as well in that the elevation and natural slope would be altered. Therefore, based on the record in this case I find, as a Matter of Fact:
1. The proposed activity would result in a significant alteration of the physical characteristic of the dune.
2. The proposed activity would constitute a contour change of the dune.

Given these findings, the inquiry turns to whether it falls under one of the seven categories in § 35316(1) that can only be performed under the authority of a special exception. The most applicable category asks whether the activity involves "[A] use involving a contour change that is likely to increase erosion, decrease stability, or is more extensive than necessary...." MCL 324.35316(1)(d).
Dr. Arbogast specializes in geomorphology, or the evolution of landscapes, and particularly eolian (wind driven) environments. He described his present research as being virtually 90 percent focused on sand dunes in Michigan, both in the interior of both peninsulas as well as along the coast of the Great Lakes. From his review of materials and on-site reconnaissance, he determined the subject dune is approximately 4,000 years old, but that the upper deposits are very poorly developed, indicating, to him, they have existed for 200 years or less.
Specific to the location of the proposed outlet, Dr. Arbogast testified it would be installed in the foredune complex as opposed to the barrier dune landward. He characterized the area as inherently unstable because it is basically a sand bar that is susceptible to wind erosion. Under current conditions of low water levels he would expect the foredune to increase in height as the prevailing west winds drive loose sand landward. He notes the possibility that this could result in part of the proposed outlet being buried within 10 to 15 years. He does not foresee any adverse effects from the proposed jack and bore installation of the discharge pipe. In addition, his report indicates:
Construction of the riprap structure will certainly modify the low-lying foredunes, but these dunes can easily be remodeled because they essentially consist of small mounds of sand that will quickly be shaped into dune forms when strong winds prevail.
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Although I see no significant problems associated with the proposed construction activities, I am concerned about impacts during future periods of high water in Lake Michigan.
Exhibit R-7, pg. 4.

Under the 30 year cycle for water levels to which he ascribes, because the last high water levels were around 1986 he would expect Lake Michigan to begin rising in the near future, and within 15-20 years the Great Lakes will be at or near all-time highs. When the water level of Lake Michigan reaches 580.7 feet, which it has on a number of occasions or the all time high of 582.3, water would be within 10 feet or in contact with the structure. At that point it would essentially act as a groin, blocking sediment on the upstream side of the littoral drift and eroding it on the opposite side.
Dr. Meadows, a Professor of Naval Architecture, Marine Engineering, and Physical Oceanography at the University of Michigan, began studying wave transformations across near shore regions of the Lake Michigan shoreline as an undergraduate student at Michigan State University. Since that time essentially all of his work has been involved with the effect of near-shore structures on natural beaches. He generally agreed with Dr. Arbogast's testimony, and added that if the water level of Lake Michigan reached the highest recorded level of 582.35 and a maximum storm surge of 1.8 feet occurred, the proposed outfall would become a shore-perpendicular groin influencing the shoreline up to six times the length of the structure in both directions. He calculated this area to be from 180 to 210 feet. According to Dr. Meadows, under such conditions, which he termed a "worst case scenario", the outfall would also eventually begin to directly impact the main barrier dune. T., pg. 1027.
As to the discharge from the pipe, neither Dr. Arbogast nor Dr. Meadows perceived any significant ongoing erosive impact to the shoreline. Dr. Arbogast testified that any erosion from the low velocities of the discharge would probably create only a slight ditch from the end of the installation to Lake Michigan, and he would not expect substantial up or down drift changes. T., pgs. 1002-1003. Similarly, Dr. Meadows testified he did not believe there would be any impacts to the shoreline related to the channel that may be created from the water discharged from the pipe. T., pgs. 1017-1018.
Dune Harbor offered the testimony of Mr. Bennett regarding the impact of the proposed activity on the dune. Mr. Bennett is a former employee of the DEQ who during his tenure worked as a state-wide coastal expert providing technical review of shoreline impacts of proposed construction or nourishment activities, as well as acting as an expert witness on coastal processes. He has been published in this field, on occasion in conjunction with Dr. Meadows. Mr. Bennett testified that a lake level of 582 feet on Lake Michigan has been met or exceeded only 2/10 of 1 percent since 1918. T., pg. 1102. Further, he calculated the probability of the simultaneous occurrence of a level or 582 feet and a storm surge of 1.8 feet to be 1 in 50,000. T., pg. 1104. In respect to the opinion of Dr. Arbogast and Dr. Meadows, he notes they based their calculations on the elevations of the underground portion of the three designs of the outfall. In Mr. Bennett's opinion, the proper elevation should be the point at which the outfall intersects with the beach profile. At this elevation, the third design would have an elevation of 586.7 feet and would not be affected even under the "worst case" scenario offered by Dr. Meadows.
To summarize the above, both Dr. Arbogast and Dr. Meadows testified that any beach erosion from water exiting the outfall would be minimal. They both also acknowledged that the installation would neither increase erosion nor decrease stability under present low water conditions. However, each is concerned with its potential effect under higher water conditions, or what Dr. Meadows acknowledged was a "worst case scenario". The statistics generated by Mr. Bennett indicate that the combination of events necessary to effectuate that scenario render it improbable. While this testimony may indicate that the concerns coming to fruition may be remote, it cannot be ruled out and therefore, its likelihood of increasing erosion or decreasing stability cannot be foreclosed. As to the second prong, whether the outfall is more extensive than necessary, the record indicates every effort has been made to engineer the system to produce the control needed while insuring adverse effects are minimized.
Based on the above, I find that, while the installation is not more extensive than necessary, it does, in fact, constitute a use involving a contour change that is likely to increase erosion or decrease stability under limited circumstances.
The analysis on the extent of the project and the GLMD's contention that placing the outflow on the bottomland of Lake Michigan constitutes a feasible and prudent alternative ties into another category of use that requires a special exception. Section 35316(1)(g) mandates the use be in the "public interest", a term utilized in the context of avoidance of an impact to the resource. In determining whether the proposed use in the public interest, § 35316(1)(g)(i) and (ii) requires an analysis of whether a feasible and prudent alternative location or method that provides the benefit sought exists, or whether there is a means to minimize the effect to the resource.
Because § 35316(1)(g) is implicated, the alternatives must be addressed, specifically those advanced by the GLMD. The first is to reconfigure the site plan to accommodate the higher water level. This was initially proposed by Ms. Hohn in a letter to Dune Harbor addressing the pending application: "the proposed subdivision could be redesigned to utilize the current inland lake level, thereby eliminating the need to lower the lake level and the need for the project." Exhibit P-4. Mr. Chandonnet testified it took a period of two years and the expenditure of $867,500 to plan and obtain approval of the existing site plan. Mr. Stebbins testified that to now re-do a plan would involve "starting from scratch", involving, among other things, totally redesigning home sites, roads, water, sewer, and other utilities. Further, there is no guarantee it would be approved. As far as costs, he testified such a plan would leave only 8 lots unaffected and involve a loss of 17 lake front lots, resulting in lost revenue of $1,725,000. Reducing the size of the remaining lots would result in a loss of $320,000. The cost of redesigning the project would be some $200,000. Adding these costs to that already expended, the total cost and lost revenue involved in a redesign of the project is $3,112,500. T., pgs. 275-277.
All of the witnesses acknowledged this alternative is feasible in that it can be physically accomplished irrespective of the costs involved. Further, to do so would alleviate the necessity of the draw down and the outfall. However, having previously found that the outfall may only cause a material adverse impact to the dune under the so called "worst case scenario", and finding later in this PFD that the smaller lake resulting from the draw down is consistent with Part 301, it would be imprudent to force Dune Harbor to spend additional millions of dollars, and I so find. Therefore, the proffered alternative, while feasible is not prudent.
The second alterative suggested by Ms. Hohn is to install "[A] pipe and an actively pumped system [that] could be designed to discharge directly to the bottom of Lake Michigan a distance from the shore…." Exhibit P-4. Ms. Hohn admitted she did not perform any kind of economic analysis, nor did she attempt to ascertain the length of pipe that would be required to make the plan viable. She also admitted having no contact with the U.S. Army Corps of Engineers (COE) on whether it would permit such an occupation of Great Lakes bottomland. T., pg. 741. Mr. Chandonnet testified that he was advised the project would cost some $1,500,000 exclusive of the costs of a pump and electricity. T., pg. 78. Further, in his opinion the COE would not be receptive to such a proposal. Id. He also expressed legitimate concerns over potential ice damage and zebra mussels invading the outlet. T., pg. 80. Mr. Dunlop agreed with the cost estimate and added such a pipe would entail significant maintenance costs as well. T., pgs. 834-835. Mr. Stebbins testified, in addition to those concerns that sand shifts could result in sand plugging the outlet. T., pg. 313. Mr. Bennett testified such a pipe would have to be some 2,000 feet long to get beyond the bar system to be successful, and that in his experience some underwater discharges have worked while others have not. T., pg. 493.
As is the case with redesigning the housing development, it is evident a pipe on Lake Michigan bottomland could be physically accomplished and hence is feasible. However, to reiterate it has been found that the outfall would only potentially impact dune in any material way under limited circumstances. Based on that finding, it would be imprudent to force Dune Harbor to incur the additional cost and undertake such a project, especially with the inherent risks outlined above. To state it another way, there is no cogent reason articulated to merit the considerable additional expenditure for what may prove at best, a high maintenance facility or at worst, an unworkable one.
Based on the foregoing findings, the ultimate issue is reached: whether the Petitioner is entitled to a special exception under § 35317(1).

Practical Difficulty
Section 35317(1) provides, as applicable:
[t]he department may issue special exceptions under the model zoning plan if a local unit of government does not have an approved zoning ordinance, if a practical difficulty will occur to the owner of the property if the variance or special exception is not granted. In determining whether a practical difficulty will occur if a variance or special exception is not granted, primary consideration shall be given to assuring that human health and safety are protected by the determination and that the determination complies with applicable local zoning, other state laws, and federal law....

Part 353 utilizes both the terms "variance" and "special exception". However, it is clear from the language of §§ 35316 and 35317 that the term "variance" is applicable to actions of local units of government under its zoning ordinance. Furthermore, the term "special exception" applies to an action of the DEQ in the absence of a local ordinance under the model zoning plan, which occurred here. However, the terms are used synonymously in this statute.
Other than mandating that primary consideration be given to human health and safety, and that the project comply with all other applicable laws, Part 353 does not define "practical difficulty". However, it is a legal term of art commonly utilized in zoning law, allowing the utilization of judicial construction of the term. The Court of Appeals articulated three factors to consider in determining whether compliance with zoning regulations will cause a practical difficulty:
1. Whether compliance with the strict letter of the restrictions governing area, set backs, frontage, height, bulk or density would unreasonably prevent the owner from using the property for a permitted purpose or would render conformity with such restrictions unnecessarily burdensome.
2. Whether a grant of the variance applied for would do substantial justice to the applicant as well as to other property owners in the district, or whether a lesser relaxation than the applied for would give substantial relief to the owner of the property involved and be more consistent with justice to other property owners.

3. Whether relief can be granted in such fashion that the spirit of the ordinance will be observed and public safety and welfare secured.
National Boatland, Inc. v Farmington Hills Zoning Board of Appeals, 146 Mich App 380, 388; 380 NW2d 472 (1985).

The form application for special exception (Exhibit P-2) contains four questions that closely follow the above test. For instance, questions A and B on the form state the same inquiry as #1 and #2 of National Boatland. Question C asks whether the plight of the owner is due to unique circumstances of the property, while question D asks whether the problem is self-created. These latter two queries may be interpreted as loosely tied to the substantial justice requirement of the second prong of the National Boatland test and will be so addressed. Therefore, the test articulated in National Boatland is utilized as this Tribunal has done in previous Part 353 cases.

I. Unnecessary Burden
This consideration requires a balancing of the proposed activity against the unique features of the property. The unique feature of this property is the unanticipated rise in the level of South Lake, necessitating the project under review. For the reasons stated, the higher level of South Lake renders implementation of the existing approved site plan impossible. To deny Dune Harbor the proposed activity to compensate for that development would prevent its using the property as it intended and be unnecessarily burdensome and I so find. Feasible and prudent alternatives are discussed below.

II. Substantial Justice Served
This standard requires a balancing of Dune Harbor's desires against the interest of other property owners in the area. There was no evidence submitted applicable to direct impacts on other property owners. The record indicates that the entire project is confined to Dune Harbor's property, and by Dr. Meadows' estimate any potential impact of the outfall will not go beyond the extensive frontage owned by that entity. While an inference may be made that any alteration of the natural features might lower the aesthetic value of the property to other owners in the area and the public, this does not equate to a deprivation of substantial justice.
The GLMD contends Dune Harbor created its own hardship by failing to properly access the potential ultimate level of South Lake. In support of this contention it provided evidence that Nugent Sand and specifically Mr. Chandonnet, was aware of higher groundwater levels. Mr. Chandonnet readily admitted this and testified to his knowledge of reported groundwater levels of 596 feet in 1980 and 590 feet in 1994. This information was gathered from groundwater monitoring performed with pziometers installed around the mining site in response to neighbors' concerns relative to impacts on the water table and their wells. However no hydrological study of South Lake was performed at either time. As to the level of South Lake, he testified it historically varied, for the most part, due to ongoing mining activities. However, it was assumed, when mining operations ceased, that South Lake would neither meet nor exceed its level of 582 to 584 feet present at the commencement of mining. T., pg. 118. Mr. Nevedal testified that in his experience, which covers the commencement of reclamation in 1987 to its completion in 1999, the highest level he recalled as 584 to 585 feet. T., pg. 170. The GLMD is critical of Dune Harbor not performing any hydrological studies until the level of South Lake substantially exceeded historic levels. However, in point of fact, in addition to the historic levels Dune Harbor relied on the input of Mr. Daniels and Mr. Hinks.
Mr. Daniels testified that he did not state what the ultimate level of South Lake might be, but did advise Mr. Chandonnet and more often Mr. Nevedal, that the level was continuing to rise, but they would not know for some time at what level the Lake would stabilize. T., pg. 642. Having prepared a sand dune mining inspection report on March 19, 2001 (Exhibit P-34), he characterized the level to be the highest he had ever seen. T., pg. 676. Mr. Hinks, a hydrogeologist, reviewed historical information provided by Dune Harbor and performed groundwater modeling on the site in 2001. From the data he ascertained the mining activities had created a water budget deficit for South Lake. He described the process in his testimony. The highest levels of around 584 would historically be present in the spring at the start of the mining season. As the mining season progressed, the level would drop off rapidly and flatten out five to six feet lower. In November when the mining activity ceased for the year, there would be a quick rise that would flatten out at the end of winter, again at about 584. This cycle would repeat itself each mining season. T., pgs. 380-381.
In reference to the rise of South Lake he testified he was surprised when the level of South Lake rose to 588 after the cessation of mining there. At that point he started doing what he termed "serious modeling". As part of that, he reviewed records back to 1999 indicating the annual pattern described above. Based on this, he testified:

I believe we have recovered full elevation of the lake. I believe the difference between where we see flattening out towards the end of the non-mining season versus what's occurred in the last three years shows recharge from two different sources, rather permeable sediments that are mined and recharge from the lake from the sides and possibly something deeper, which is-which is pushing this up over the last couple years, two or three years.
T., pg. 381

From this record it is evident that the rise in the level of South Lake to 592 feet was wholly unanticipated and fortuitous. It is further evident that Dune Harbor reasonably relied on existing data in its assumption that the level of South Lake would revert to its original level. It is important to note, too, that the spikes of 596 feet in 1980 and 590 feet in 1994 were groundwater levels, not the surface level of South Lake. Therefore, the formulation of the site plan based on that assumption was reasonable. I find, as a Matter of Fact, that substantial justice would be served by allowing the draw down of South Lake as proposed.

III. Relief within the Spirit of Part 353
The "spirit" of Part 353 is articulated in the legislative findings:
(a) The critical dune areas of this state are a unique, irreplaceable, and fragile resource that provide significant recreational, economic, scientific, geological, scenic, botanical, educational, agricultural, and ecological benefits to the people of this state and to people from other states and countries who visit this resource.
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(c) The benefits derived from alteration, industrial, residential, commercial, agricultural, silvacultural, and the recreational use of critical dune areas shall occur only when the protection of the environment and the ecology of the critical dune areas for the benefit of the present and future generations is assured.
MCL 324.35302.
Both Dr. Arbogast and Dr. Meadows, as stated, perceived no adverse impacts of the outfall under present conditions. While Dr. Meadows alluded to possible problems at high water levels, the likelihood of the "worst case scenario" has been previously addressed. Should the level of Lake Michigan reach highs beyond that of the mid-1980s the damage to the barrier dune complex, along with the entire shore environment, would be catastrophic, irrespective of the presence of the outfall on the beach. Mr. Bennett's testimony on this phenomenon is especially compelling:
A. Even in the 1986 water levels, which were substantially lower than that, there were catastrophic failures of the bluff faces, sand dune collapses, a number of homes went in, shore protection failed, groin systems emptied out, erosion occurred behind them.

Q. You say it did affect shoreline structures as well?

A. Oh, yeah.

Q. What kind of structures are you talking about?

A. Groins, seawalls, revetments.

Q. And under those conditions, Mr. Bennett, would any of the proposed outfall structures here have any additional material impact on the shoreline.

A. It would be hard to separate the impact of the structure at that point from the natural-occurring erosion, very difficult, because it would be so catastrophic. In fact, the structures would probably get cut behind both of-behind them, and they'll probably potentially fail also.
T., pg. 1107

In the final analysis, based on this record, the alteration of the dune proposed would have no appreciable adverse effects on the environment and ecology of the critical dune area. Therefore, the benefits outlined in the above legislative findings to the people, present and future is assured.

Having found that on this record there are no feasible and prudent alternatives to the pipe and outfall, the various configurations of that activity must be addressed.

The Alternative Designs
In what is fairly characterized as an evolutionary process, Dune Harbor considered numerous designs of the outfall. Three designs were placed into evidence and are depicted in Exhibit P-24. Mr. Stebbins explained the designs appear to be somewhat different than the original submittals in that the orientation and datum of each was altered to be consistent in order to allow accurate comparison. The designs are as follows:
1. This is the initial proposal, and was prepared by Mr. Stebbins and Mr. Bennett. It involves an outfall with a plunge pool approximately 55 feet long and 35 feet wide. At the base are 3 ton stones placed over erosion control fabric, edged with 200 to 1,000 pound stones to match the existing grade. The purpose of the design is to dissipate the energy of the water discharge to prevent erosion.

2. This proposal, labeled Revision #4, is similar to #1. The primary revision is its substance. The plunge pool is reduced to 42 feet wide, but 63.5 feet long. While both of these plunge pool designs would be installed below grade, this design is dug deeper into the beach with a 12-inch layer of bedding stone over erosion control fabric topped and edged with 200 to 1,000 pound stone. This design was proffered in response to the GLMD staff's concerns over the original designs ability to withstand the natural forces of ice and storms.

3. The third design was suggested by Mr. Jannereth during the review of the application for special exception. It is essentially a revetment 15 feet long and 28 feet wide. This design has the highest elevation above the OHWM at approximately 586 feet, or 4 feet above the highest recorded water level for Lake Michigan. While this design would greatly decrease the probability of water reaching it, the design would not dissipate as much energy from the water discharge resulting in a small channel through the foredune into Lake Michigan. Dr. Arbogast testified this channel or erosion would be insignificant due to the ephemeral or transient nature of the foredune, which he did not consider to be "very noteworthy in terms of their geology". He was asked:
Q. If I understand you, you're saying that this foredune complex is going to change shape on it own regardless of whatever may be there?
A. That's right.
Q. Whatever structure might be placed there?
A. That's right. You can't say the same thing, though, for the barrier dune ridge. That's a very different system.
T., pgs. 1089-1090.

Any of the designs would require maintenance and during periods of low water levels or low precipitation the installation may become covered by sand. Ice could cause some stone movement. In higher water levels some erosion might occur around the installation. That being said, none of these eventualities would present a situation that could not be rectified. The record indicates Dune Harbor's willingness to install any of the three designs, although the original would be preferred.
Based on Dr. Arbogast's testimony that there would be no significant impact to the foredune complex regardless of which of the three installations was built and the unlikely probability of any impact to the barrier dunes, from an environmental perspective any would appear acceptable. However, although minimal, the revetment (#3) would cause, to some degree, more erosion or channeling than the others. Regarding either of the two plunge pool designs (#1 and #2) Mr. Bennett testified he saw no "measurable degree" of impact to the dune. T., pg. 475. Mr. Dunlop testified the ultimate expected base flow (after the initial drawdown) would be 1.2 feet per second. At such a low rate he would not expect erosive effects. He also noted that the volume of water drawn from the lake and discharged to the pipe could be controlled so as not to exceed 1.2 feet per second. T., pgs. 829-830.
The GLMD argues none of the three designs should be allowed. The basis of that argument is summarized on page 3 of the GLMD's Closing Argument: "As Lake Michigan rises, the waters in the subject man-made lakes will correspondingly rise, creating the need to release increasing volumes of water from the inland lakes and through the outfall pipeline, in order to accomplish Petitioner's goals." Quite simply, the record does not support this assertion. In fact, the evidence is to the contrary, as indicated in Mr. Daniel's inspection report of March 19, 2001, where he states under general comments:
The South Lake is at or very near what should be it's normal high stand. This elevation does NOT seemed (sic) to be directly controled (sic) by Lake Michigan elevations - since this "high stand (sic) was last observed in 1988 or 1989 - when Lake Michigan was high - and now it has come back to this elevation when Lake Michigan is at a 50 year + cyclic low. Appearently (sic) the gradient between the lakes will merely steepen or flatten to accomadate (sic) the differences. There must be some change in aquifer characteristics downgradient or some "sealing" of the south lake bottom to account for this high of an elevation to be so independent of Lake Michigan controls.
Exhibit P-24.

Mr. Hinks attributed this phenomenon to something akin to the effect of an artesian well:
An artesian well will have a higher water level in it than the shallow water - groundwater surrounding it. In cross section, if you look at the present site and the lake levels, it's almost - that's the topography and you have the lake and then it drops off into Lake Michigan. The water table comes in, and it's quite striking how it drops off down toward the lake. If you were just - generally a lake reflects kind of an average groundwater elevation between the upgradient side and the downgradient. This is much closer to the upgradient side than the downgradient and needs that extra source, I believe, to bring it to that level.
T., pg. 384.

Based on this record, there is no demonstrated risk that the inevitable higher levels of Lake Michigan during those cycles will affect the level of South Lake, and consequently increase the volume of water through the outlet system. Regardless, as stated by Mr. Dunlop, the outflow can be controlled to not exceed 1.2 feet per second. This, of course, would also serve to control climatic variances.
Next, the issue of which of the three proposed outfalls is the most appropriate must be determined. The general effects of any outfall on the dune and the particular characteristics of each have been outlined above. To cut to the chase, I find that the design identified as #3 should be employed. There are a number of reasons for reaching this conclusion. It is smaller in size than the others, and even though none of the designs would present a material adverse impact, a smaller size would present the least impact. The smaller size may present a risk of more erosion in that there is less area to diffuse the flow. However, once the flow reaches the design level there is little or no risk of erosion of any lasting effect because the dune and beach comprise a dynamic system constantly being moved by wind and wave action. Its elevation of 586.7 feet would according to Mr. Bennett, avoid the perils set forth under Dr. Meadows' so called "worst case scenario." Another factor that cannot be ignored is the fact that design #3 was proposed by the GLMD, in the person of Mr. Jannereth, as a possible alternative. Obviously, that alternative was not permitted, mainly because the GLMD took the position that the outfall constituted a "structure" and was absolutely forbidden in the location proposed. This Tribunal has for the time being, rejected that argument. In sum, the GLMD having proposed that design, at least as a possibility, and Dune Harbor being willing to employ it, coupled with the finding as to a lack of adverse impact to the resource, support the conclusion it should be permitted, and I so find, as a Matter of Fact.

CONCLUSIONS OF LAW - PART 353
Based on the findings of fact set forth above, I conclude, as a Matter of Law:
1. Dune Harbor Estates, LLC is the proper applicant for a permit and the processing of the application for a permit was procedurally correct.

2. The proposed activity is a use as the term is defined in Part 353. MCL 324.35301(j).

3. No feasible and prudent alternative location or method to accomplish the benefits expected from the use to minimize the impact to the dune has been established on this record. MCL 324.35316(1)(g)(i) and (ii).

4. Dune Harbor Estates, LLC, has demonstrated a practical difficulty sufficient to merit a special exception for the project as modified by the utilization of the outfall configuration found to be appropriate. MCL 324.35317(1); National Boatland, Inc. v Farmington Hills Zoning Board of Appeals, 146 Mich App 380; 380 NW2d 472 (1985)

PART 301 ANALYSIS

Section 30106 provides the prerequisites to issuing a permit:

The department shall issue a permit if it finds that the structure or project will not adversely affect the public trust or riparian rights....
MCL 324.30106.
It has been previously determined in the June 24, 2003 Order that since the water bodies are neither impressed with the public trust nor subject to riparian rights, there can be no impacts thereon. However, beyond addressing those considerations, § 30106 provides the following standards for the review of an application submitted under its authority:
In passing upon an application the department shall consider the possible effects of the proposed action upon the inland lake or stream and upon the waters from which or into which its waters flow and the uses of all such waters, including uses for recreation, fish and wildlife, aesthetics, local government, agriculture, commerce and industry.
MCL 324.30106.

Recreation
As a preface, it is undisputed that the proposed development contemplated around South Lake will provide recreation in the nature of swimming, boating, and fishing to the residents. Beyond that obvious conclusion is the impact to the resource if the level of South Lake is lowered. To evaluate the impacts of the proposal on the aquatic resources of South Lake, Dune Harbor retained Mr. Kogge. The major part of this testimony and his qualifications are recited in the analysis of the impacts on fish and wildlife later in this PFD. Relative to recreation, from his review of the plans, previously designed by Robert Leighton and Associates, as well as his own on site reconnaissance, he determined that South Lake was designed for recreation with shallow 8 percent slopes to facilitate a safe non-motorized boating and swimming environment. T., pg. 878. A number of photographs demonstrate South Lake has a hard sand bottom and good quality water. Exhibits P-27A-I. Under the current level of South Lake some of the shallow water and safe contours of the lake have been eliminated, thereby diminishing recreational activities from that which would result if the level is lowered. Specifically, Mr. Kogge testified the elevated water level has inundated the 32 percent landward slopes required for reclamation by the GLMD, thereby creating a steeper and less safe near shore area. T., pg. 883. In sum, restoration of the anticipated lower level would restore the recreational potential and values envisioned.

Fish and Wildlife
The primary objection of the GLMD revolves around the impact of lowering the water level on the littoral zone. The sole witness for the GLMD is this regard is Mr. Fortney. In his testimony, he basically reiterated the language of the denial letter of April 9, 2003, which, as pertinent, stated:
The proposed lowering of the water level within the inland lake(s) below the natural level will result in the destruction of more than 30 acres of shallow water (littoral zone) habitat. This habitat is critical to the fishes and aquatic communities that have developed in the subject lakes(s).
Exhibit P-3.

When Mr. Fortney was asked whether anything he had heard during the course of the hearing to that point would alter his opinion, he stated:
I have heard at least what I could characterized as rumor that the-an agent for the applicant has done a little more investigation and is suggesting that the shallow slopes in the submerged portion of the lake are actually at an offshore location now as a result of the higher water levels and there may, in fact, be an increase in littoral zone habitat or shallow water habitat if the lake is lowered. I was intrigued by that. And if it happens to be true, I would believe it certainly. T., pg. 765.

The "rumor" referenced by Mr. Fortney was the opinion of Dune Harbor's agent Mr. Kogge, who testified after Mr. Fortney. Mr. Kogge has a Masters Degree from Michigan State University in fisheries and aquatic biology. In June 2003, he assessed, on behalf of Dune Harbor, the resource values of both North and South Lakes. In that capacity he initially reviewed existing documentation, including surveys, correspondence and existing permits. Then he and Mr. Stebbins boated around South Lake and walked its shoreline to assess the fisheries resources, specifically the shore slopes and contours that encompass its littoral zone. As a result of his study he came to an opinion that consists of two parts. First, by reducing the size or area of the lake by approximately 12 acres, the carrying capacity or number of fish the lake could sustain will necessarily be reduced. He perceived this result as a detriment to the resource. However, because the elevated level of the lake has reduced the zero to six-foot shore contour as designed in the reclamation project, lowering the level will restore the most productive area of the lake: the shallow littoral zone.
Regarding wildlife, Mr. Chandonnet described South Lake as a "thriving wildlife habitat" with the presence of ducks, geese, swan, and cormorants. T., pg. 137. None of the witnesses presented by the GLMD directly addressed wildlife impacts. The sole reference to wildlife came during Mr. Fortney's testimony as to whether he thought a reduction in fisheries and wildlife habitat in South Lake would result in impairment or destruction of natural resources of the state as defined in 1999 MR 6, R 281.811(g)(iii). T., pg. 770. The sole substantive testimony regarding wildlife came from Mr. Kogge. In his opinion, lowering the level of South Lake would have an adverse effect on wildlife. With the present elevation, the trees that have come in along that 32 percent slope are now underwater. This serves to provide some structure and habitat for waterfowl. The submerged vegetation that is now under water. T., pg. 894.

Having made these overall assessments as to both fish and wildlife, and being asked whether he thought there would be anything more than minimal impacts to the environment, Mr. Kogge concluded that any adverse impacts would be minimal and would, in fact, enhance some resources. Because lowering the level would create a greater distance of the zero to six-foot near shore contour that resource would be enhanced. Even though the acreage of the water body would decrease the creation of a better quality shallow water habitat outweighs the loss of area. T., pgs. 897-898.
In sum, we are left with a record where only Mr. Fortney and Mr. Kogge addressed this criteria. As noted, Mr. Fortney frankly stated that if Mr. Kogge testified as rumored and that testimony was true, he would believe it. Mr. Kogge's opinion regarding fish is credible and essentially unrebutted. As to wildlife, Mr. Kogge perceived a minimal detriment, and he concluded that after balancing those detriments against the benefits that would result if the level of South Lake was lowered, the overall effect of the project would be positive. Again, this opinion is essentially unrebutted. Based on this record, I find as a Matter of Fact, that the net effects on fish and wildlife will be positive.

Aesthetics
Mr. Kogge testified the proposal would enhance aesthetics by providing the development as planned in respect to the lot sizes, lake contours and appearance. He noted under the current conditions many of the plantings and trees are inundated and that lowering the water level would restore them to their original intended appearance. In general, GLMD would prefer a re-worked plan that would result in less building sites and, therefore, less general intrusion. It would also prefer not to have the outlet on the beach.
In the end this is a necessarily subjective criteria because aesthetics are literally in the "eyes of the beholder". Having said that, there is nothing in this record to support a finding that any portion of the proposal would be so out of character with the area as to render it unaesthetic. It is evident that the residential development will be comprised of high end homes on or near a high quality lake. The outfall will not be so obtrusive as to negatively alter the general aesthetics of the beach area. I find, therefore, that aesthetics will not be adversely affected.

Local Government, Agriculture, Commerce, and Industry
There is no evidence of any present or potential use of the lakes, which are entirely owned by Dune Harbor, by local government or agriculture. There is also no evidence of any past, present, or future commercial or industrial uses that would be affected, other than the sand mining activities of Dune Harbor's parent company, Nugent Sand. Naturally, any impact to that entity would be welcomed by it given the common ownership.

Finally, § 30106 prohibits the DEQ from issuing a permit "if the proposed project or structure will unlawfully impair or destroy any of the water or other natural resources of the state." To implement this provision the DEQ promulgated 2000 MR 8, R 281.814:
In each application for a permit, all existing and potential adverse environmental effects shall be determined and the department shall not issue a permit unless the department determines both of the following:
(a) That the adverse impacts to the public trust, riparian rights, and the environment will be minimal.
(b) That a feasible and prudent alternative is not available.