April 30, 2014 – A clean water advocacy group that relied on an attorney general letter to challenge a permit allowing pollution discharges into the Fox River recently lost its appeal, as a state appeals court ruled that the attorney general letter was incorrect.

In 2012, the Wisconsin Department of Natural Resources (DNR) reissued a permit to Appleton Coated LLC, which allowed the paper production facility to discharge treated wastewater into the lower Fox River.

The Clean Water Action Council of Northeast Wisconsin (Water Action Council), an advocacy group promoting clean water in Wisconsin, sought to challenge the DNR’s decision through a petition for judicial review. It did not seek a contested case hearing first.

In seeking judicial review, Water Action Council relied on letter from the Wisconsin attorney general’s office stating that judicial review was the only avenue for individuals, including individual corporations, to challenge such permits.

A circuit court dismissed in favor of the DNR, concluding that the Water Action Council was required to seek a contested case hearing before seeking judicial review.

In Clean Water Action Council of Northeast Wisconsin v. DNR, 2013AP2112 (April 29, 2013), a three-judge panel for the District III Court of Appeals affirmed, noting that statutes with administrative remedies are exclusive and parties must exhaust them.

The panel rejected the Water Action Council’s argument that a contested case hearing was not the exclusive procedure and, in the alternative, the circuit court should have granted judicial review on the ground that Water Action Council relied on the letter.

Review Procedure

The applicable statute, Wis. Stat. section 283.63(1), says applicants, permittees, the state, or “5 or more” individuals “may” request that the DNR review a decision to grant a permit. Under the statute, individuals must band together. If the request is timely, a public hearing is held and the petitioner can present evidence to support its allegations.

The Water Action Council says incorporation of the term “may” within the statute does not foreclose the possibility for seeking judicial review before seeking administrative review. But the three-judge panel noted that a previous case already decided this issue.

In Sewerage Commission v. DNR, 102 Wis. 2d 613, 307 N.W.2d 189 (1981), the Wisconsin Supreme Court ruled that section 283.63 requires an objector to pursue and obtain a contested case hearing before seeking judicial review in the courts.

“The court made it clear this holding applied regardless of whether the challenged agency action was a rule or a permit, and regardless of whether the challenge involved questions of fact or law,” wrote Judge Lisa Stark.

The panel noted that Sewerage Commission has stood for more than 30 years, and the legislature has not acted to abrogate its holding concerning section 283.63 procedures.

The Water Action Council also argued that the statute violates federal regulations that prohibit states from narrowly restricting the class of persons who may challenge such environmental decisions. The panel said the Environmental Protection Agency (EPA) should decide that issue, but suggested the state statute stood on solid ground.

“[The state statute] merely requires any person who is not a permit applicant or permittee to join with four other like-minded persons in order to secure review of a permitting decision,” Judge Stark wrote.

The Water Action Council relied on a 2012 letter to the DNR from the Wisconsin Attorney General’s Office, which said that an individual, standing alone, cannot seek contested case hearings under section 283.63 and must be able to seek judicial review.

As corporations are individuals, Water Action Council argued that judicial review was proper, but the appeals court panel noted that the attorney general letter was wrong.

“The attorney general’s conclusion that individual persons may obtain direct judicial review of [Wisconsin Pollution Discharge Elimination System] permitting decisions under Wis. Stat. § 227.52 is inconsistent with Sewerage Commission,” Stark wrote.

No Exception

The appeals court panel refused to apply any exception to the general rule that petitioners must exhaust their administrative remedies before seeking judicial review.

The panel noted that circuit courts have discretion to apply the exhaustion doctrine, and may grant exceptions in “exceptional cases.” In this case, however, the panel ruled that the circuit court had good reasons to apply the doctrine without exception.

The Water Action Council said an exception should apply because the entity relied on the attorney general’s letter in bypassing administrative review for judicial review.

“We disagree,” Judge Stark wrote. The panel noted that the Sewerage Commission case has stood for 30 years, and the Water Action Council should have adhered.

“Rather than following the procedure required under Sewerage Commission, [the Water Action Council] chose to rely on a novel interpretation of that case proffered by the attorney general in an informal opinion,” Judge Stark wrote. “It did so despite the well-established fact that attorney general opinions are not precedential authority.”