Dec. 28, 2021 – The decision of an administrative law judge (ALJ) that the Wisconsin Department of Natural Resources (DNR) failed to comply with state law in issuing permits for a frac sand facility was supported by substantial evidence, the Wisconsin Court of Appeals has ruled.  

In Meteor Timber, LLC v. Wisconsin Division of Hearings, 2020AP1869 (Dec. 16, 2021), the Court of Appeals District IV upheld the ALJ’s reversal of the DNR’s decision to issue the permits.  

Mining for Frac Sand

Meteor Timber, LLC applied to the DNR for a wetland individual permit in March 2016. The company sought to fill 16.25 acres of wetlands in Monroe County, then mine sand from the wetlands and transport it by rail for use in fracking.

The DNR issued a wetland individual use permit to Meteor Timber in March 2017.

The permit included conditions that required Meteor Timber to submit additional information to the DNR for approval. The conditions also required the company to either modify the wetland mitigation plan or submit additional information about the plan.

Meteor Timber provided the DNR with some of the additional information required by the conditions. The company also submitted a revised mitigation plan.

Amended Permit

In October 2017, the DNR issued Meteor Timber an amended wetland individual permit.

That permit contained conditions that required the company to submit additional information to the DNR for approval. The conditions also required the company to make modifications to the wetland mitigation plan or submit information about the plan.

Most of the information required to be submitted by the conditions contained in the amended permit was required to be submitted by the conditions contained in the original permit. 

Clean Wisconsin petitioned the DNR to hold a contested case hearing challenging the DNR’s decision to issue the permits, and the Ho-Chunk Nation intervened as a petitioner.

An administrative law judge (ALJ) held a five-day contested case hearing in the spring of 2018. A dozen witnesses appeared and approximately 100 exhibits were submitted.

Order and Appeal

In May 2018, the ALJ issued an order reversing the DNR’s decision to issue the permits. The ALJ concluded that the DNR’s approval of the permits was improper for the following reasons:

•          The DNR lacked enough information to determine the net positive or negative environmental impact on the wetlands, as required by Wis. Stat. section 281.36(3n)(b)5;
•          The proposed mining project would have a significant adverse impact on the wetlands, in violation of section 281.36(3n)(c)3; and
•          The company’s mitigation plan was inadequate, in violation of section 281.36(3n)(d).

Meteor Timber petitioned for judicial review of the ALJ’s decision. The circuit court denied the company’s petition and ruled that the ALJ’s decision was supported by the record and was legally correct.

In an opinion written by Judge JoAnne F. Kloppenburg, a three-judge panel upheld the ALJ’s decision.

The ALJ’s conclusion that the DNR did not comply with relevant statutes in issuing the permits was based on both findings of fact that were supported by the record and on a correct interpretation of the statutes, Kloppenburg wrote.

Environmental Impact

The ALJ’s conclusion that the DNR issued the initial permit despite the lack of sufficient information about the environmental impact of Meteor Timber’s plans was supported by ample evidence, Kloppenburg wrote.

Among that evidence was testimony from the DNR’s wetland mitigation coordinator. The coordinator testified that while the project required a site-specific hydrology performance standard, no final standard existed when the permit was issued.

Additionally, support for the ALJ’s conclusion came from language in the permit itself and correspondence between Meteor Timber and the DNR.

That correspondence confirmed that Meteor Timber hadn’t submitted hydrologic and hydraulic information the agency needed before it could issue the permit. 

Meteor Timber argued, among other things, that the ALJ’s decision was erroneous because it was permissible for the DNR to issue permits that contained conditions.

“That cannot be true as to conditions that require the submission of information that the Department need to make a determination as to the proposed project’s environmental impact, as required before it may issue a permit,” Kloppenburg wrote.  

Significant Adverse Impact

There was also ample evidence to support the ALJ’s conclusion that the DNR had issued the permit despite evidence the project would have a significant adverse impact on the wetlands.

A wetlands ecologist retired from the DNR testified that the vegetation performance standards in the company’s mitigation plans were not adequate to make up for the wetlands that would be lost because of the project.

The retired ecologist also testified that without the required hydrology and vegetation performance standards and necessary soil data, “the likelihood the mitigation plan will compensate for the loss of the irreplaceable high quality wetlands is ‘pretty much zero.”

Flawed Mitigation Plan

The evidence also supported the ALJ’s conclusion that the mitigation plan submitted by the company was inadequate.

The retired ecologist testified that “‘there is nearly a zero percent likelihood that the mitigation plan would compensate for the loss created by the proposal to fill the existing wetlands.’”

And the DNR’s wetland mitigation coordinator testified that an adequate mitigation plan was needed to “‘to offset…functional loss” caused by the company’s project.   

Meteor Timber argued that the ALJ improperly credited the testimony of the retired ecologist over the testimony of DNR employees. But the appellate panel rejected that argument because “we do not second-guess the ALJ’s weighing of the evidence and determinations of credibility.”

“Rather,” Kloppenburg wrote, “our role is to review the record to determine whether the conclusion of law is based on findings of fact that are supported by substantial evidence, and is therefore a conclusion that reasonable minds could make.”