Wisconsin Supreme Court Issues Key Navigable Water Rights Opinion

July 16, 2013

In a case pending since 2005, the Rock-Koshkonong Lake District, et al., challenged the Wisconsin DNR’s water level order for Lake Koshkonong, a large impoundment of the Rock River in Rock County, Wisconsin. At issue, generally, was whether the target lake levels to be maintained by the Indianford Dam were lawfully established under Wis. Stats. sec. 31.02(1).

Between 2006 and 2012, an Administrative Law Judge, the Rock County Circuit Court, and the Wisconsin Court of Appeals all approved the DNR’s water level order. The Lake District then appealed to the Wisconsin Supreme Court, which issued its Decision on July 16, 2013. The Supreme Court reversed and remanded the case back to the Rock County Circuit Court for further proceedings.

The Supreme Court addressed four (4) issues. First, the Court concluded that DNR’s interpretation and application of sec. 31.02 was not entitled to deference by the Court. Accordingly, the Court reviewed the legal issues, de novo, without giving any weight to the original decision-maker, DNR.

Second, the Court addressed DNR’s consideration of impacts on wetlands adjacent to navigable waters when making a water level order. Section 31.02(1) prescribes that DNR will set water levels “in the interest of public rights in navigable waters.” The parties to the case disputed what consideration should be given to wetlands above the ordinary high water mark (OHWM) of a water body.

The Court made two (2) distinct findings with respect to these wetlands. First, the Court considered the Constitutionally-based Public Trust Doctrine. Emphasizing its belief that navigability is critical to lands being subject to the Public Trust Doctrine, the Court ruled that non-navigable wetlands above the OHWM are not protected by the Public Trust Doctrine, and therefore, the Public Trust Doctrine should not be considered relative to those wetlands as part of the water level determination.

However, the Court then drew a distinction between police powers and the Public Trust Doctrine: “Applying the State’s police power to land above or beyond the OHWM of navigable waters – to protect the public interest in navigable waters – is different from asserting public trust jurisdiction over non-navigable land and water.” Thus, the Court recognized that DNR has a variety of statutory authorities, grounded in police powers, to protect wetland and water resources, including non-navigable wetlands. Thus, the Court held that “DNR can consider water level impact on all adjacent property under Wis. Stats. sec. 31.02(1).” While all riparian rights must be considered in a water level determination, the DNR may emphasize some rights over others and its discretion will be upheld so long as it considers all property rights.

Third, the Court addressed whether wetland water quality standards, under NR 103, could be considered in a water level determination. The Court construed secs. 31.02 and 281.92, Stats., in harmony, to allow DNR to consider wetland water quality standards when making a water level order. Those standards would be considered as part of the greater analysis and weighing of factors under sec. 31.02(1).

Fourth, the Court addressed the Lake District’s position that DNR incorrectly excluded some evidence of economic impacts during the original contested case hearing. Section 31.02(1) includes a direction that water level determinations “protect life, health and property.” The evidence that was excluded generally addressed secondary or cumulative economic effects of lower water levels on riparian properties. The ALJ did consider testimony as to direct economic effects on riparian owners.

The Court held that DNR must consider the effects of a water level determination on the economic incidents of “property.” The Court directed that a “reasonableness standard” should apply as to what economic impacts are too remote / attenuated to consider. Further, “evidence of economic impacts is not dispositive in a water level determination; hypothetically, on remand the DNR could still reject a petition for higher water levels on Lake Koshkonong even after considering the economic impacts of lower water levels on property.” The administrative record already contains economic evidence that was presented but subsequently excluded by the ALJ.

Ultimately, in a split (4-3) opinion, the Court remanded the case back to the circuit court for further proceedings. The principal difference for decision-makers reviewing this matter, moving forward, will be to incorporate the economic impacts to property as part of the overall weighing of all factors.

The dissenting opinion, authored by Justice Crooks, criticized the majority for unnecessarily addressing the Public Trust Doctrine and placing a restrictive interpretation thereon. The dissent suggests that DNR should, as trustee of the Public Trust, be able to consider things that affect navigable waters – such as considering the impact of raising water levels on adjacent private wetlands above the OHWM. Additionally, the dissent contended there was no legal basis to compel DNR to consider additional economic evidence, and that the record documented sufficient consideration by DNR of property rights.

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For more information about "Wisconsin Supreme Court Issues Key Navigable Water Rights Opinion," contact Buck V. Sweeney at csweeney@axley.com or 608.283.6743 or Mitch R. Olson at molson@axley.com or 608.283.6724.