July 14, 2021 – The Wisconsin Supreme Court recently held (4-2) that the state’s Department of Natural Resources (DNR) erroneously interpreted the law in concluding that it had no authority to consider the environmental impacts of high-capacity wells.

In 2014 and 2015, the DNR received eight high-capacity well applications. High capacity wells are often used for agricultural irrigation.

At the time, an environmental impact review was required for some wells and not others. However, the DNR sometimes conducted an environmental impact review even if not required.

In this case, the DNR placed eight well applications on hold. The DNR later found that seven wells would have adverse environmental effects on waters held in public trust but approved the applications, concluding it did not have authority to deny them.

The DNR’s decision was based on its own interpretation of Wis. Stat. section 227.10(2m), enacted in 2011, which prohibits state agencies from implementing or enforcing any conditions on permits unless “explicitly” required or permitted by statute or rule promulgated under provisions that govern administrative rulemaking.

Clean Wisconsin Inc. and Pleasant Lake Management District appealed the DNR’s decision, concluding that the Wisconsin Supreme Court decision in Lake Beulah Management District v. DNR, 2011 WI 54, was contrary to the DNR’s decision.

In Lake Beulah, a unanimous court held that the DNR – under provisions within Wis. Stat. Chapter 281 and the state’s public trust duties – “has the authority and a general duty to consider whether a proposed high capacity well may harm waters of the state.”

However, then-Wisconsin Attorney General Brad Schimel, in 2016, issued an opinion concluding that the Lake Beulah decision did not address section 227.10(2m) and “neither Wis. Stat. ch. 281, nor the public trust doctrine give DNR the authority to impose any condition not explicitly allowed in state statute or rule.”

In approving the well applications, the DNR looked to the attorney general’s opinion to conclude that section 227.10(2m), enacted a month before Lake Beulah was decided, is not good law because the Lake Beulah decision did not consider the new provision.

In Clean Wisconsin Inc. v. Wisconsin Department of Natural Resources, 2021 WI 72 (July 8, 2021), the state supreme court considered “whether § 227.10(2m) commands a different conclusion here than in Lake Beulah” and concluded that it does not.

That is, a four-justice majority ruled that under Lake Beulah and despite section 227.10(2m), the DNR still has authority to consider the environmental impacts of all high-capacity wells and also has authority to deny the well applications in this case.

The Arguments

Clean Wisconsin argued that the unanimous Lake Beulah decision still applies to the DNR’s authority to require high-capacity wells to pass an environmental impact review.

In accepting this argument, the circuit court noted a footnote in the court’s Lake Beulah decision, which stated that the court’s conclusion “was not affected” by enactment of section 227.10(2m) a month earlier. “We agree with the parties that 2011 Wisconsin Act 21 does not affect our analysis in this case,” Justice N. Patrick Crooks noted in a footnote. “Therefore, we do not address this statutory change any further.”

The DNR appealed. The Wisconsin Legislature intervened, as did various industry organizations, including Wisconsin Manufacturers & Commerce, Dairy Business Association, Midwest Food Processors Association, Wisconsin Potato & Vegetable Growers Association Wisconsin Cheese Makers Association, Wisconsin Farm Bureau Federation, Wisconsin Paper Council and Wisconsin Corn Growers Association.

On appeal, the DNR reversed its position and agreed with the argument asserted by Clean Wisconsin (Gov. Tony Evers’ administration took office while the appeal was pending). The intervenors argued that § 227.10(2m) abrogated Lake Beulah.

The Majority Decision

The state supreme court examined whether section 227.10(2m) prohibits the DNR “from considering the potential environmental effects of a proposed high capacity well when such consideration is not required by Wis. Stat. § 281.34(4).”

Justice Rebecca Dallet wrote the majority opinion, joined by Chief Justice Annette Ziegler, Justice Ann Walsh Bradley, and Justice Jill Karofsky.

Justice Dallet noted that the supreme court no longer affords any deference to an agency’s interpretation of the law. She also noted that the public trust doctrine, which protects Wisconsin navigable waters, is enshrined in the state constitution.

“The legislature, as one of the public's trustees, has delegated to the DNR some of its public trust responsibilities,” Justice Dallet wrote.

The majority noted that under Wis. Stat. section 281.12(1), the legislature has mandated that the DNR “carry out the planning, management, and regulatory programs necessary for implementing the policy and purpose of this chapter.”

That includes “plans and programs for the prevention and abatement of water pollution and for the maintenance and improvement of water quality.”

“To that end, the DNR regulates the construction and operation of high capacity groundwater wells,” wrote Justice Dallet, noting sections 281.34(2) and 281.35.

“All high capacity wells must be approved by the DNR through a discretionary permit process. The DNR is never obligated to give its approval.”

The majority acknowledged, as the parties did, that an environmental impact review is not legislatively required for the high capacity wells at issue in this case

But the majority disagreed with the intervenors, which argued this means the DNR is prohibited from considering environmental impacts when making application decisions.

“We addressed the same issue in Lake Beulah,” Justice Dallet noted. “We unanimously rejected those arguments, holding that the DNR has both a constitutional duty and the statutory authority to consider the environmental effects of all proposed high capacity wells. We held that the DNR's constitutional public-trust duty stems from the legislature delegating to the DNR that obligation via Wis. Stat. §§ 281.11 and 281.12.”

“Our unanimous decision there correctly interpreted the well-permitting statutes, each of which is the same today as it was in 2011.”

The majority also held that section 227.10(2m) does not alter the analysis. “The DNR's authority to consider the environmental effects of proposed high capacity wells, while broad, is nevertheless explicitly permitted by statute,” Dallet wrote.

“The DNR's authority to consider the environmental effects of all high capacity wells is consistent with § 227.10(2m) and the DNR erred when it concluded otherwise.”

The majority upheld the circuit court’s decision to vacate the well application approvals and remanded to the DNR to consider the environmental impacts.

Dissent

Justice Rebecca Bradley dissented, joined by Justice Patience Roggensack, concluding the legislature “both withdrew a portion of agency power and dictated how that power is to be exercised” when it enacted section 227.10(2m) and 2011 Wisconsin Act 21.

“A faithful reading of Wis. Stat. § 227.10(2m) leads to the inescapable conclusion that the legislature abrogated Lake Beulah and curtailed the broad grants of authority previously delegated to agencies –  including DNR,” Justice R. Bradley wrote.

“DNR has no explicit authority to conduct an environmental impact review for any of the eight high capacity wells at issue in this case because the legislature has not explicitly required or permitted such reviews. No statute or lawfully promulgated rule provides DNR with any explicit authority to take this regulatory action.”

Justice Brian Hagedorn did not participate.