Privatizing the Chesapeake

After seeing its oyster fishery almost depleted, Maryland finally introduces aquaculture and private leasing.


For 35 years, Johnny Shockley was a Chesapeake Bay waterman. In the winter, he bundled into his oilskins and sweatshirts and set off in his handcrafted boat, dredging for oysters. Come spring, he shed a few layers and switched to crabbing, pulling up hundreds of pots of crustaceans from the floor of the bay. In the fall, he repaired boats.

Like the rest of the men who live on Hooper's Island, a thin chain of low-lying marshlands that stick into Maryland's portion of the Chesapeake like a finger, Shockley was following in the footsteps of his father and grand­father. But by 2009, oyster harvests had fallen to such disastrous levels that the watermen had trouble making a living. To help save the oyster, Maryland ramped up restrictions on where the watermen could harvest and what kinds of gear they could use. The state's newly reelected Democratic governor, Martin O'Malley, was talking about closing 25 percent of the Chesapeake's fishable oyster habitat to harvesting.

To make up for the watermen's lost revenue, O'Malley's administration did something radical in the history of the state: It opened the door to oyster aquaculture, the farming of oysters on "beds" laid out on the floor of the Chesapeake Bay.

The Maryland General Assembly passed a law in 2009 that essentially legalized leasing private beds to grow oysters, a practice that had effectively been banned for more than a century. A few entrepreneurs—among them an investment banker, a shop teacher, an aerospace engineer, and a satellite company retiree—had already taken the plunge into oyster farming in anticipation of the change. Yet most Maryland watermen weren't interested. They had fought for more than a century to ban aquaculture; why should they bother competing with privately raised oysters when the state was subsidizing their wild-caught product? Besides, they didn't want out-of-towners coming in to buy up the bay's bottom—they didn't think a mom-and-pop watermen's operation could compete with the likes of a Sara Lee or a Del Monte Foods. And even though some acknowledged the tide was turning, they still saw no point in paying to raise a product that nature provided for free and the state heavily subsidized in the form of expensive shell-planting programs and publicly funded hatcheries.

Shockley decided to give aquaculture a look. He drove south to Virginia, where oyster farmers have been in business since the 1800s. He immediately recognized that growing oysters in cages on his dock would be preferable to fighting wind and rain in the Chesapeake. He came back to Hooper's and talked to a friend, Ricky Fitzhugh, about going into business together. While Shockley had a waterman's know-how, Fitzhugh had access to markets through the fish company he ran.

Shortly after the law passed, the pair applied to the Maryland Department of Natural Resources (DNR), asking to lease 10 acres of bay bottom off Maryland's lower Eastern Shore. When Shockley finally got the permit approved for his new company Chesapeake Gold in March of 2011, he became one of the first watermen in Maryland to farm shellfish. The semi-privatization of the bay's bottom is helping undo a century of history. It has the added benefit of helping to restore depleted oyster stocks, but at the expense of the private sector instead of Maryland's taxpayers.

"It's a change from what we've been used to," Shockley says. "But when people see how this plays out, it's going to make sense."

Public Oysters, Private Oysters

The Chesapeake Bay is the nation's largest estuary. At 200 miles long, it stretches from the mouth of the Susquehanna River in Havre de Grace, Maryland, all the way to the Atlantic Ocean near Virginia Beach. The two states may share the waters known as Great Shellfish Bay, but their historical approaches to how to manage the shellfish within it couldn't be more different.

The divergence happened in the 19th century, when the Chesapeake Bay produced nearly half of the oysters eaten in the United States. Canneries in Baltimore and Norfolk packaged the bivalves, and by 1852 railroads were shipping them to the Midwest.

Maryland and Virginia had long fought among themselves over the bay's most lucrative product, the species Crassostrea virginica. As early as 1808, oystermen from New England and Long Island were sailing down to the Chesapeake and dredging for oysters after they'd depleted their own beds back home. Both states passed laws banning the practice of dredging by outside companies, but the New Englanders found a way to come in anyway. In 1877, a bay-wide survey showed a decline in oyster populations. Both states recognized that they had to do something or the oysters would be lost forever. That wouldn't be just an economic blow: Oysters filter the water and build reefs, which are excellent habitat for fish, crabs, and the smaller organisms on the bottom of the food chain.

Virginia responded by effectively privatizing its oyster fishery. Scientists surveyed and mapped their oyster bars, then developed a system for leasing the bars out to oystermen. The leases cost a nominal fee and were renewable every 10 years; to keep the lease, oystermen only had to prove they were working it. Virginia put no restrictions on how many acres an oysterman could lease, nor did it care if the oysterman had a corporation or was just an individual. And if an oysterman didn't want his grounds anymore, the state didn't care if he subleased them to another entrepreneur. 

Because oysters grow best on a bed of clean shells, Virginia oystermen bought their own shell from shucking houses and placed their own seed on it. If oysters weren't doing well in one area, the oystermen could move them to another. Because they owned the product, they weren't restricted on the gear they could use or the seasons they could harvest.

Maryland's solution, in contrast, was to make the oysters harder to catch. The state passed a series of restrictions on what kind of gear the oystermen could use, when they could harvest, where they could harvest, and the size of oyster they could take.

Pressure mounted in the early 1900s for the state to change its mind on aquaculture. But Eastern Shore legislators, buoyed by the votes from their watermen communities, always killed or weakened any attempts at privatization. A 1906 statute known as the Haman Law was supposed to bring a minimal leasing structure to Maryland. In the end, it was so gutted that an oysterman could only lease barren bottom—and even that option was limited to two Eastern Shore counties.

Meanwhile, Maryland took steps to prop up the oyster fishery with public funds. In 1922, the state began a shell-planting program, in which natural resources officials plant shell around the Chesapeake to provide the best substrates on which to grow young oysters. In 1927, the state required all oyster processors to make 10 percent of their shell available to the state for the planting; that was increased to 20 percent in 1947 and 50 percent in 1953. In 1961, Maryland began a shell-dredging program, in which the state subsidized the movement of shells from one part of the bay to another in hopes of growing more oysters.

Every few years, a scientist or a politician or an editorial writer would broach the idea of privatizing Maryland's fishery, so as not to keep throwing money overboard. "Almost every generation, a new commission or task force would form," recalls Don Webster, a University of Maryland extension agent who has been trying to establish aquaculture in Maryland since the 1970s. "Almost all of them would come out with recommendations for leasing. And then it wouldn't happen."

As a result, Virginia today has more than 100,000 acres under lease. Its private harvest long ago eclipsed the public fishery that the state still maintains. The state is home to dozens of oyster growers and five private hatcheries.

Maryland, in contrast, has only about 4,500 acres under private lease. Until the law passed, only about five oyster operations existed in the state. Now there are 13, with several more businesses awaiting approval to use nearly 2,000 acres of leases. The state has three hatcheries, all funded with public money. One, the Horn Point Hatchery at the University of Maryland, recently received $11 million in state funds to build a new dock. Another is a Department of Natural Resources hatchery; a third is operated by Morgan State University, courtesy of state and federal funds.

Private growers can, on occasion, buy seed from Horn Point, but the laboratory's first priority is to its own research and restoration work. And it doesn't offer the variety that many growers want. Many oyster farmers are grow- ing individual animals in cages or floats, as opposed to the old-school restoration method of planting many oysters on one shell so they will build reefs.

The availability of different kinds of oysters and the choices of where to buy them has allowed Virginia growers to experiment and prosper. In the process, they admit, they have killed a lot of oysters; but they have also learned what not to do.

"Private industry is just great for innovation," says Jim Wesson, the head of conservation and replenishment for the Virginia Marine Resources Commission, which regulates aquaculture in the state. "Since it's your own dollar, you're going to make sure that it works. All you have to do is have the profits change a little teeny bit to motivate you."

Devastation and Adaptation

The private model proved its merits when the bottom fell out of the oyster industry.

In 1982, the Maryland dockside value of the year's haul of oysters was more than $20 million; the following year, it fell to just $14 million. By 1989, it fell again to $7 million. And in 1994, it was a devastating $1 million.

The culprit? Two parasitic diseases, MSX and Dermo, that attack oysters between the second and third year of life. MSX thrives in saltier waters, such as those in lower Maryland and Virginia, while Dermo was more of an Upper Bay problem. Maryland continued to spend several million dollars propping up the fishery, moving oysters from the saltier waters to the fresher areas in hopes of giving them a chance. But that only spread the disease further, resulting in more mortality and thousands of oystermen losing their jobs.

Since 1994, Maryland has spent more than $40 million in state and federal funds to bring back the oysters and the oystermen, but the state has little to show for that effort. Oysters remain at 1 percent of their historic biomass levels. And where thousands of oystermen once plied the Chesapeake, only a few dozen hardy souls still make their living that way today.

In Virginia, the diseases were no less devastating. But the private growers were better able to adapt. When the extent of the crisis became clear, growers started turning to a different animal to survive: the clam.

C. Chadwick Ballard, for example, realized by 1983 that his vast oyster grounds along Cherrystone Creek on Virginia's Eastern Shore were becoming worthless. He put in a campground to try to make ends meet, but it wasn't enough. He heard about a course being given on how to grow clams, which were not susceptible to the same sicknesses as oysters. He decided to give it a try.

To run the experiment, Ballard hired Mike Peirson, who had just received his Ph.D. from North Carolina State University. Peirson says he took the job because he was desperate; in the recession of the early 1980s, he couldn't find anything else.

With their toddler son looking on from an empty aquarium tank, Mike and his wife Lee began growing clams. Their company, Cherrystone Aquafarms, is now a $15-million-a-year business.

Their success prompted many imitators. Virginia now does $30 million a year in clam sales. Many of the growers were guys like Ballard, who turned to clams because they could no longer grow oysters.

Maryland, not surprisingly, has almost no private clam operations, and its wild clam fishery is all but defunct. Part of the reason is that much of the state's water is too fresh to grow clams. But there's no reason a robust private clam industry couldn't have started up in the Coastal Bays, where the Chesapeake meets the ocean near Ocean City. No reason, except that the regulatory structure didn't allow it, and the watermen who harvested clams didn't have an interest.

Genetically Modified Oysters

Diseases left the oyster industry on both sides of the Chesapeake in decline for much of the 1990s, with some good years but mostly poor ones. Scientists in both states continued to try to breed an oyster that would be resistant to diseases. But for the most part, they had no luck.

Virginia was about ready to give up on the oyster that bears its name. The state wanted to introduce an Asian species, Crassostrea ariakensis, that would not be susceptible to the two diseases and would grow faster and larger than the natives. The Virginia Seafood Council wanted to grow sterile Asian oysters, both because they would grow faster and because that would quell fears of an accidental introduction. To conduct the experiments, though, they needed a large control group of sterile native oysters. So they turned to Standish Allen, a geneticist at the Virginia Institute of Marine Science, who had been developing sterile oysters for years.

Most scientists and growers believed that the Asian oyster would far outperform the native, and that it would be introduced into the Chesapeake as an aquaculture product within a few years.

But two unexpected developments occurred. Allen never could breed a native oyster that was completely resistant to diseases, but through his targeted genetic selection, he created one that could outrun it. His triploids were ready to harvest 12 to 18 months after being planted, so they reached a market size of three inches before the diseases hit. That was more than twice as fast as an oyster could grow in the wild.

Not only did the home-grown oyster exceed expectations, but its Asian rival had some unexpected flaws. Asian oyster shells are thinner and tend to gape open, making them a good product for the cheap shucking house market but virtually unusable in the more lucrative half-shell market for the white-tablecloth restaurants. Also, the Asian oyster had its own parasite problems: A worm called polydora infected the species at a rate not seen in the natives.

In 2005, Allen began offering his broodstock to private hatcheries throughout Virginia. The reception was enthusiastic. State growers were planting about six million oysters in 2005; last year, they produced more than 40 million. Some of the producers included companies like Cherrystone. After 25 years in clams, Peirson says, they were willing to give oysters another try. The gamble appears to be working out; Cherrystone alone grows 10 million oysters a year now, more than all the growers in Maryland combined.

"The triploid oyster is a completely different animal," Peirson says. "You're almost not worried about diseases."

Maryland did not benefit from these oyster advances; its fishery was simply not set up to do so. In 2005, only two small growers existed in the state, and leasing productive bottom was still illegal in most counties. Even where leasing was legal, the permits were nearly impossible to secure. More than half a dozen agencies had a hand in regulating aquaculture. The Maryland Department of the Environment was in charge if growers wanted to use cages or floats. It also tested the water. (Growers needed a clean bill of health for 18 months years before they planted anything.) The Maryland Department of Natural Resources regulated anything planted on the bottom, such as shells. The health department regulated how long oysters could be outside and under what conditions. The Coast Guard and the Army Corps of Engineers had a say in any interference with navigation. If the project was near a bridge, the state highway administration wanted to weigh in too. The National Oceanic and Atmospheric Administration (NOAA) wanted to make sure the oyster beds didn't interfere with sensitive underwater grasses, sea turtles, and sturgeon.

In Virginia, by contrast, growers deal with one agency: the Virginia Marine Resources Commission. It has the authority through the Army Corps to issue permits. Businesses usually get one in less than three months, compared to more than a year in Maryland.

So Virginia's dynamic market adapted quickly to the new opportunity. In Maryland, meanwhile, Republican Gov. Robert R. Ehrlich Jr. pushed for a massive introduction, at taxpayer expense, of a reproducing Asian oyster population to the bay. That idea lost momentum because of the price tag, the risks involved, and opposition from other coastal states. By the time the states and the federal government decided, after spending $15 million on studies, that they were not going to introduce the Asian oyster, Virginia had moved on. Maryland was again left with little to show for its efforts.

Feds in the Way

In 2005, the Maryland General Assembly passed legislation to create the Aquaculture Coordinating Council, which could help growers sort through the bureaucratic morass and obtain permits. Even so, the growers struggled. 

Ernie Nichols, a retired satellite company executive, tried to get a permit in 2004 to start his company, Uncle Ernie's Tangier Sound Oysters. He called the Department of Natural Resources frequently and even wrote to the governor, but it still took two years. "It was terrible," Nichols recalls. "I said, 'I'm a process guy. Explain the process.' The DNR guy said, 'There is none."

Similarly, Jon Farrington waited more than 14 months to acquire his first permit. During that time, the Army Corps of Engineers said it had to determine whether his oyster upweller system, which is about the size of a large bathtub, was a hazard to navigation. Farrington lives on a small creek about 60 miles south of Washington. Any ship headed for his oysters would basically crash into his front yard. 

Eventually, the Corps said he didn't need the permit. But that delay cost Farrington time and money. "The hard part is all the red tape," says Farrington, whose company, Johnny Oysterseed, focuses on selling seed and equipment. "Growing the oysters, that's the easy part."

Last year, Farrington applied for more acres to lease. This time, he just went for the bottom lease, which he assumed the aquaculture-friendly Department of Natural Resources would issue within a few months. But by then the Corps had decided it had jurisdiction over those leases as well.

Oyster farmers all put shell on the bottom of their leases to help their crops grow. The Corps considers each piece of shell as "fill." Anyone filling a wetland, whether for growing oysters or putting in an oil derrick, needs an individual permit from the Army Corps of Engineers. And all such projects must go through a public notice process.

"It doesn't matter if it's a subdivision, a road, or aquaculture," says Bill Seib, chief of the regional branch of the Baltimore Corps' district. "If one of those is going to occur and the project is in the waters of the United States, you will need a permit."

So Farrington's little lease application sat on the Corps' website, along with applications to dredge Baltimore Harbor, expand marinas, and build landfills. It took eight months to get approval for planting oysters on the bottom, an activity the state engages in at the taxpayers' expense on a regular basis.

"It's just so ridiculous," Farrington says. "This process is really intended for these significant, detrimental projects. I'm going to be enhancing the environment and here I am, shoved into this."

He adds: "I'm happy that the state wants to encourage this. And the state is doing the right thing. But it's terribly frustrating that the state is being stymied by the federal government. It's even more crazy because it's just one particular agency."

Slowly, the O'Malley administration has followed a two-pronged approach to restoring oysters in the state. It has declared its intentions to close public oyster grounds, arguing that the restoration of oysters benefits all citizens. And it has opened up the leasing laws to give the state a chance at an industry.

The 2009 aquaculture law stripped away many of the restrictions on leasing. Now every county in the state allows leasing. Corporations can lease, too. Dozens of individuals have applied. At press time, Maryland announced that it had sorted out its issues with the Army Corps and NOAA. State officials had been hopeful they would have a leasing system in place like the one in Virginia. They didn't quite get there: The Corps will have a much greater role in the approval process. But it's a step in the right direction.

The governor also helped put the Maryland Department of Natural Resources in charge of all aquaculture regulation, thus eliminating all the bureaucratic waiting. Of the agencies involved, growers say, the DNR has been the most helpful and the most interested in seeing aquaculture succeed.

On Hooper's Island, Shockley is counting on reform to prevail, and quickly. He's got a website, a company name, and a spot in the water filled with his crop. At stake is not just his own future, but those of the rest of the state's watermen. If he can do this, he says, many will follow.

"The only thing holding us up now is the slow movement of our federal government," Shockley says. "There's nothing else." 

Rona Kobell is a staff writer at the Chesapeake Bay Journal.