Kohler Co. v. Wis. Dep't of Nat. Res.

410 Wis. 2d 433

Kohler Co., Petitioner-Appellant,

v.Wisconsin Department of Natural Resources, Respondent-Respondent,Claudia Bricks and Friends of the Black River Forest, Intervenors-Respondents.

Court of Appeals

No. 2021AP1187. Submitted on briefs March 15, 2022.— Decided December 5, 2023.

2024 WI App 2

(Also reported in 3 N.W.3d 172.)

APPEAL from an order of the circuit court for Sheboygan County: L. EDWARD STENGEL, Judge. Affirmed.

On behalf of the petitioner-appellant, the cause was submitted on the briefs of Deborah C. Tomczyk, Jessica Hutson Polakowski and Monica A. Mark of Reinhart Boerner Van Deuren s.c., Madison.

On behalf of the respondent-respondent, the cause was submitted on the brief of Joshua L. Kaul, attorney general, and Gabe Johnson-Karp, assistant attorney general.

On behalf of the intervenors-respondents, the cause was submitted on the brief of Christa O. Westerberg and Leslie A. Freehill of Pines Bach LLP, Madison.

Before Stark, P.J., Hruz and Gill, JJ.

¶ 1. GILL, J. In anticipation of building a new golf course, Kohler Company sought approval from the Department of Natural Resources (DNR) for a "wetland individual permit" to discharge dredged material or fill material into 3.69 acres of wetlands. Following a lengthy process, the DNR granted Kohler's permit request. Claudia Bricks and Friends of the Black River Forest (collectively, the FBRF) then filed a petition for a contested case hearing, which the DNR granted. Following the hearing, an administrative law judge (ALJ) issued a decision and order reversing the DNR's issuance of the permit, finding, among other things, that the DNR did not have enough information at the time it issued the permit to adequately analyze the "significant adverse impact[s]" to wetland functional values (WFVs), water quality, or "other significant adverse environmental consequences." See Wis. Stat. § 281.36(3n)(c)3. (2021–22).¹ Thereafter, the DNR adopted the ALJ's decision as its own final decision, and Kohler petitioned for judicial review. The circuit court affirmed the ALJ's decision.

¶ 2. On appeal, Kohler argues that the ALJ: (1) erred when he considered the entire proposed project when assessing the permit application, including wetlands and unregulated activities not related to the specific 3.69 acres of wetlands to be filled; (2) incorrectly found that the DNR did not have enough information at the time it issued the permit; (3) made findings that were unsupported by substantial evidence (namely, that the proposed project would cause cumulative impacts and that nutrients and pesticides would reach the groundwater and wetlands and would cause significant adverse impacts); (4) improperly reversed the DNR's decision instead of modifying the permit; and (5) erred when he required the DNR and Kohler to make "quantitative findings" with regard to secondary impacts.

¶ 3. We first conclude that Wis. Stat. § 281.36(3n)(b) and (c) require the DNR to consider the entirety of a "proposed project" when addressing a wetland individual permit, not just the wetlands within a proposed project. By its plain meaning, § 281.36(3n)(c) instructs the DNR to determine whether a proposed project will result in "significant adverse impact[s]" to WFVs and water quality, and whether the proposed project will result in "other significant adverse environ- mental consequences." As we will explain, this review necessarily requires the DNR to consider impacts beyond the physical footprint of directly impacted wetlands. For example, the DNR must consider "[p]otential secondary impacts" to WFVs and the "net positive or negative environmental impact of the proposed project." See § 281.36(3n)(b)3., 5. This conclusion is affirmed by Wis. Admin. Code § NR 103.03(1) (July 2015),² which defines WFVs to include the value of habitats for birds and "scenic beauty."

¶ 4. Second, we conclude that the ALJ's decision that the DNR did not have enough information at the time it issued the permit to adequately analyze the "significant adverse impact[s]" to WFVs, water quality, or "other significant adverse environmental consequences" is supported by substantial evidence. Furthermore, the ALJ's decision did not "depend[]" on a finding that significant cumulative impacts to WFVs would occur if the project was approved and completed. See Wis. Stat. § 227.57(6). Specifically, the ALJ's ultimate conclusion that the DNR did not have the information necessary to make a Wis. Stat. § 281.36(3n)(c)3. determination did not depend on the finding that significant cumulative impacts to WFVs could result from the proposed project's construction. Additionally, we conclude that there was substantial evidence to support the ALJ's finding that the DNR lacked information to determine whether nutrients and pesticides would reach the groundwater and wetlands, and whether the nutrients and pesticides would cause significant adverse impacts.

¶ 5. We further conclude that the ALJ did not err by reversing the DNR's decision without first modifying the permit because Kohler never raised that issue with the ALJ and therefore forfeited any argument that the ALJ should have modified the permit. Lastly, we determine that the ALJ did not require the DNR or Kohler to make "quantitative findings" with regard to secondary impacts. We therefore affirm the circuit court's order affirming the ALJ's decision reversing the DNR's issuance of the wetland individual permit to Kohler.

BACKGROUND

I. The property

¶ 6. Kohler owns a 247–acre property in the City of Sheboygan.³ The undeveloped property is bordered by Lake Michigan to the east, the Black River to the west, and the Kohler-Andrae State Park to the south, and it is currently zoned as suburban residential.

¶ 7. The property includes eighty-one wetlands totaling approximately forty-seven acres,⁴ which the DNR categorized into four wetland types⁵: floodplain forest wetlands (44.167 acres), interdunal wetlands (0.4886 acres), ephemeral/relic ridge and swale wetlands (hereinafter, "relic ridge and swale wetlands") (0.104 acres), and Great Lakes ridge and swale wetlands (2.686 acres).

¶ 8. According to the wetland individual permit issued to Kohler, the interdunal wetlands and both types of ridge and swale wetlands on the property "are considered high to exceptional quality and globally rare." Similarly, the DNR found that the floodplain forest wetlands on the property are "high quality and rare in the region because of the loss of ash trees and increase of invasive species." In addition to the wetlands, the DNR stated that the property "is almost entirely forested with mature trees and has not been logged in over 150 years."

¶ 9. The property contains three separate aquifers: a shallow sand aquifer, a Silurian dolomite aquifer, and a deep Cambian-Ordovician aquifer. According to the final EIS, all of the wetlands on the site are "directly connected" to the shallow sand aquifer, which has "a depth to groundwater" level "of only a few feet." The Silurian dolomite aquifer is approximately 120 feet below the ground surface but it "is typically under artesian conditions with water levels well above the top of the aquifer and, in many instances, at or above the ground surface." The deep Cambian-Ordovician aquifer is approximately 750 to 950 feet below the ground surface.

¶ 10. According to the final EIS, all of the wetlands "are hydrologically connected to Lake Michigan." Furthermore, the interdunal wetlands and both types of ridge and swale wetlands "are dependent on groundwater for recharge and maintenance of water levels and water quality." Conversely, the floodplain forest wetlands "are dependent on both groundwater and surface water runoff to maintain water levels and determine water quality."

II. The proposed project

¶ 11. Kohler proposes to construct and operate an 8,000-yard, eighteen-hole golf course on the property. Kohler's stated goal for this project is to build a world-class golf course that is rated in the top fifty golf courses in the world and has the potential to host major championship golf events.

¶ 12. All of the parties on appeal agree that the proposed project would completely fill 3.69 acres of wetlands, specifically: 0.1 acre of relic ridge and swale wetlands, 1.36 acres of Great Lakes ridge and swale wetlands, and 2.23 acres of forested floodplain wetlands. As part of the project, Kohler would clear approximately 100 to 120 acres of forested land cover in order to build, among other things, fairways, greens, and tees. Much of the disturbed area would be replaced with "turfgrass," specifically "Creeping Bentgrass," a type of grass commonly used on golf courses.

III. Procedural history

¶ 13. As discussed in more detail below, Kohler applied for, and received, a wetland individual permit to fill the 3.69 acres of wetlands needed to construct the golf course. The FBRF subsequently filed a petition for administrative review, which the DNR granted. On review, the ALJ reversed the DNR's decision to grant Kohler the permit. Kohler petitioned for judicial review, and the circuit court affirmed the ALJ's decision to reverse the issuance of the permit. Kohler now appeals.

DISCUSSION

[1, 2]

¶ 14. "When an appeal is taken from a circuit court order reviewing an agency decision, we review the decision of the agency, not the circuit court." Hilton ex rel. Pages Homeowners' Ass'n v. DNR, 2006 WI 84, ¶ 15, 293 Wis. 2d 1, 717 N.W.2d 166. In this case, the DNR did not petition for judicial review of the ALJ's decision and therefore adopted the decision as its own pursuant to Wis. Stat. § 227.46(3)(a), and Wis. Admin. Code § NR 2.155(1) (Feb. 2019).⁶ See also Hilton, 293 Wis. 2d 1, ¶ 14; Meteor Timber, LLC v. DHA, 2022 WI App 5, ¶ 20, 400 Wis. 2d 451, 969 N.W.2d 746 (2021), review denied (WI Apr. 13, 2022) (No. 2020AP1869). "Accordingly, we review the ALJ's decision as the [DNR's] final decision." See Meteor Timber, 400 Wis. 2d 451, ¶ 20.

¶ 15. Wisconsin Stat. § 227.57 establishes the...