Lake Beulah Mgmt. Dist. v. State Dep't of Natural Res.

335 Wis.2d 47

799 N.W.2d 73

2011 WI 54

LAKE BEULAH MANAGEMENT DISTRICT, Petitioner–Appellant–Cross–Respondent,Lake Beulah Protective and Improvement Association, Co–Petitioner–Co–Appellant–Cross–Respondent,

v.STATE of Wisconsin DEPARTMENT OF NATURAL RESOURCES, Respondent–Respondent,Village of East Troy, Intervening-Respondent-Respondent-Cross-Appellant-Petitioner.

No. 2008AP3170.

Supreme Court of Wisconsin.

Argued April 13, 2011.Decided July 6, 2011.

For the intervening-respondent-respondent-cross-appellant-petitioner Village of East Troy there were briefs by Paul G. Kent and Barbara A. Neider, Stafford Rosenbaum LLP, Madison and oral argument by Paul G. Kent.For the petitioner-appellant-cross-respondent Lake Beulah Management District there was a brief by Dean P. Laing, O'Neil, Cannon, Hollman, DeJohg & Laing S.C., Milwaukee and oral argument by Dean P. Laing.For the co-petitioner-co-appellant-cross-respondent Lake Beulah Protective and Improvement Association there was a brief by William T. Stuart, Meissner Tierney Fisher & Nichols, S.C.For the respondent-respondent State of Wisconsin Department of Natural Resources there was a brief by Carl A. Sinderbrand, Axley Brynelson, LLP and Judith M. Ohm, Wisconsin Department of Natural Resources and oral argument by Carl A. Sinderbrand.There was an amicus brief by Andrew C. Cook, Robert I Fassbender and Great Lakes Legal Foundation, Inc., Madison, on behalf of Attorneys for Dairy Business Association, Midwest Food Producers Association, Wisconsin Manufactures & Commerce, and Wisconsin Paper Council.There was an amicus brief by Michael D. Dean and First Freedoms Foundation, Inc., Waukesha and Theodore Hadzi–Antich and Pacific Legal Foundation, Sacramento on behalf of Pacific Legal Foundation.There was an amicus brief by Thomas D. Larson and Wisconsin Realtors Association, Madison on behalf of Wisconsin Realtors Association and the Wisconsin Builders Association.There was an amicus brief by Jodi Habush Sinykin and Elizabeth Lawton and Midwest Environmental Advocates, Madison on behalf of Wisconsin Wildlife Federation, River Alliance of Wisconsin and Clean Wisconsin.There was an amicus brief by Claire Silverman and League of Wisconsin Municipalities, Madison and Brian G. Formella and Anderson, O'Brien, Bertz, Skrenes & Golla, Stevens Point on behalf of Wisconsin Rural Water Association, Inc.There was a nonparty brief by William P. O'Connor and Mary Beth Peranteau and Wheeler, Van Sickle & Anderson, S.C. on behalf of Wisconsin Association of Lakes.N. PATRICK CROOKS, J.

¶ 1 This is a review of a published decision of the court of appeals ¹ involving the Wisconsin Department of Natural Resources' (DNR) decision to issue a permit to the Village of East Troy (the Village) for a municipal well, Well No. 7, on September 6, 2005. Well No. 7 was constructed and began operating on August 1, 2008.² The Lake Beulah Management District (LBMD) and the Lake Beulah Protective and Improvement Association (LBPIA), referred to collectively as the conservancies, challenged the DNR's decision to issue the 2005 permit without considering the well's potential impact on nearby Lake Beulah, a navigable water. The Walworth County Circuit Court, the Honorable Robert J. Kennedy presiding, denied the petition for review, concluding that, while the DNR had some duty to consider the impact of proposed wells on waters of the state, the DNR did not violate its obligations by issuing the 2005 permit because there was no evidence that the well would harm Lake Beulah. The conservancies appealed.

¶ 2 The court of appeals held that the DNR has the authority and duty to consider the environmental impact of a proposed high capacity well if presented with sufficient scientific evidence suggesting potential harm to waters of the state.³ The court of appeals concluded that the DNR was presented with such evidence in this case and remanded to the circuit court to order the DNR to consider the impact of Well No. 7 on Lake Beulah.⁴

¶ 3 We conclude that, pursuant to Wis. Stat. § 281.11, § 281.12, § 281.34, and § 281.35 (2005–06),⁵ along with the legislature's delegation of the State's public trust duties,⁶ the DNR has the authority and a general duty ⁷ to consider whether a proposed high capacity well may harm waters of the state.⁸ Upon what evidence, and under what circumstances, the DNR's general duty is implicated by a proposed high capacity well is a highly fact specific matter that depends upon what information is presented to the DNR decision makers by the well owner in the well permit application and by citizens and other entities regarding that permit application while it is under review by the DNR.

¶ 4 We further hold that to comply with this general duty, the DNR must consider the environmental impact of a proposed high capacity well when presented with sufficient concrete, scientific evidence of potential harm to waters of the state. The DNR should use both its expertise in water resources management and its discretion to determine whether its duty as trustee of public trust resources is implicated by a proposed high capacity well permit application, such that it must consider the environmental impact of the well or in some cases deny a permit application or include conditions in a well permit.

¶ 5 Thus, we affirm that part of the court of appeals decision holding that the DNR has the authority and a general duty, which it described as something less than an absolute duty, to consider the impact of a proposed high capacity well on waters of the state.⁹ We further affirm the court of appeals' conclusion that this general duty requires the DNR to investigate or consider potential harm to waters of the state only when such duty is triggered, and that there are limited ways in which citizens may present evidence of potential harm to the DNR.¹⁰

¶ 6 However, we reverse that part of the court of appeals decision that reversed and remanded to the circuit court with directions to remand to the DNR. That part of the court of appeals decision was based on the court of appeals' conclusion that the DNR's duty was triggered in this case by the conservancies' submission of an affidavit by geologist Robert J. Nauta (the Nauta affidavit) to the DNR's in-house attorney regarding a related proceeding. ¹¹ The court of appeals assumed that the DNR's attorney was not one of the decision makers and used the principles of attorney-client imputation—imputing the DNR attorney's possession of the Nauta affidavit to the DNR decision makers—to conclude that the decision makers had this information while reviewing the 2005 permit application and to include it in the record on review.¹² The record is silent regarding who the DNR decision makers were and whether they actually had the Nauta affidavit while reviewing the 2005 permit application. Based on the lack of information on these matters in the record on review, we must reverse the court of appeals decision to remand to the circuit court with directions to remand to the DNR.

¶ 7 We note that the right to review of the DNR's decision regarding a high capacity well permit application “is dependent upon strict compliance with [Wis. Stat. ch. 227].” ¹³ “Ch. 227 provides a comprehensive, fully defined, procedure for judicial review of administrative decisions.” ¹⁴ In a challenge to a DNR decision, “[d]eveloping a factual record ... is essential, because [ § 227.57] limits judicial power over administrative decisions to review of the agency's actions, based on the record developed before the agency.” ¹⁵ In this case, based on the record on review, which does not include the Nauta affidavit, the DNR was not presented with sufficient concrete, scientific evidence of potential harm to waters of the state, and thus, we affirm the DNR's decision to issue the 2005 permit. ¹⁶

¶ 8 Therefore, we affirm in part and reverse in part the decision of the court of appeals.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

¶ 9 Well No. 7 has been the subject of extensive litigation, and the issues raised in this case are related to the conservancies' challenge to the 2003 permit. While only the DNR's decision regarding the 2005 permit is under review by this court, the history of and litigation involving the 2003 permit is relevant, and thus, is included herein.

¶ 10 In order to provide adequate drinking water to its growing number of residents, in 2003, the Village first applied to the DNR to construct a municipal well with a capacity of 1,400,000 gallons per day (gpd).¹⁷ Along with its application and fee, the Village submitted reports from the consulting firm Crispell–Snyder, Inc., providing detailed specifications for the well and the results of its well site investigation. The report described the surrounding land use, the surface topography, the hydrogeology of the area, the location of potential contamination sources, the results of test pumping, and the location of nearby wetlands. This report also relied, in part, on an investigation by Layne–Northwest, another consulting firm the Village hired in 2000 to select a suitable site for its well.

¶ 11 On September 4, 2003, the DNR issued a letter to the Village granting it a permit to construct and operate Well No. 7, hereinafter referred to as “the 2003 permit.” In this letter, the DNR relied on its conclusion that Well No. 7 would not “have an adverse effect on any nearby wells owned by another water utility.” The DNR also included Layne–Northwest's opinion that Well No. 7, pumping at its full capacity, “would avoid any serious disruption of groundwater discharge to Lake Beulah.” The 2003 permit provided that “[i]f construction or installation of the improvements has not commenced within two years the approval shall become void and a new application must be made and approval obtained prior to commencing construction or installation.”

¶ 12 Well No. 7 is located 1,200 feet from Lake Beulah. Because of their concern about Well ...