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May 11, 2016Client Alert

Wisconsin Attorney General Clarifies DNR’s Authority over High-Capacity Wells

Wisconsin Attorney General Brad D. Schimel issued an opinion on May 10, 2016, that clarifies the role and authority of the Wisconsin Department of Natural Resources (WDNR or Department) in the issuance of high-capacity well permits, bringing greater certainty to business owners that seek regulatory approvals from state agencies.

The Opinion concludes that WDNR cannot impose a condition on a high-capacity well approval (or any regulatory permit) other than those conditions explicitly allowed in statute and rule. As applied to high-capacity well approvals, the Department may not condition a high-capacity well permit on the installation of monitoring wells or upon conducting a cumulative impact analysis. While the opinion focuses on high-capacity well approvals, its major conclusion—that WDNR cannot impose conditions or draft rules for which it does not have explicit statutory or regulatory authority—may be applied to all regulatory approvals statewide; this is a significant development for regulated businesses in Wisconsin.

The Department’s authority regarding conditioning and reviewing high-capacity well approvals has been uncertain since the Wisconsin Supreme Court issued its opinion in Lake Beulah Management District v. Department of Natural Resources, 2011 WI 54, 355 Wis. 2d 47, 799 N.W.2d 73. The Court in Lake Beulah held that WDNR had a duty and implied public trust authority through Wis. Stat. §§ 281.11-.12 to impose conditions on high-capacity wells to protect the state’s water resources. Interpreting this decision, an Administrative Law Judge (ALJ) held in 2014 that DNR is obligated to consider cumulative impacts of high-capacity well approvals. The ALJ’s decision led to WDNR’s current policy of analyzing the cumulative impacts of all wells and sources of water drawdown surrounding and in combination with the proposed well for each high-capacity well application.

Since the Lake Beulah decision, the Legislature has passed two laws that define WDNR’s authority to condition permits. First, 2011 Wisconsin Act 21 (Act 21) was enacted on May 23, 2011, and created Wis. Stat. § 227.10(2m). That provision states that an agency may not implement or enforce a standard, threshold or requirement, including as a term or condition of a permit, unless that requirement is either explicitly required or explicitly authorized by statute or a properly promulgated administrative rule. Act 21 was recently found to limit WDNR’s authority to impose a monitoring condition on a high-capacity well permit because no explicit authority authorized the condition. (We have recently summarized Act 21 and its application in the courts in this article.)

Second, shortly after the ALJ decision cited above, the Legislature passed Wis. Stat § 281.34(5m), which states that no person may challenge an approval or application of an approval for a high-capacity well based on a lack of consideration of cumulative impacts, indicating, contrary to the ALJ’s position, that the Legislature had not delegated a duty to consider cumulative impacts to WDNR. (We have previously written about Wis. Stat. § 281.34(5m) in this article.)

Attorney General Schimel’s May 10 Opinion discusses both the Judicial and Legislative actions since Lake Beulah described above to answer four questions raised by the Wisconsin Assembly Committee on Organization:

1) Whether the Court in Lake Beulah Management District v. Department of Natural Resources considered Wis. Stat. § 227.10(2m) in its decision;
2) Whether WDNR has the authority to impose monitoring well conditions or require cumulative impact evaluations for high-capacity well permits based on Wis. Stat. §§ 281.11-.12 (statutory authority identifying general powers of WDNR);
3) Whether the Wisconsin Legislature has delegated WDNR public trust authority to condition high-capacity well permits; and
4) Whether any statute or rule explicitly authorizes WDNR to impose monitoring well conditions or cumulative impact evaluations for high-capacity well permits.

The Opinion first states the Court in Lake Beulah did not consider Act 21 in its decision because the permit at issue was passed before the adoption of Act 21. Therefore, the Opinion concludes the Court’s discussion of WDNR’s public trust duty in regard to high-capacity well permitting in Lake Beulah is no longer controlling.

Second, in examining whether the Legislature has granted WDNR explicit authority to impose monitoring conditions or require cumulative impact evaluations for high capacity well permits, the Opinion concludes that no such explicit authority has been provided to WDNR and that “permit conditions are lawful only if they are permitted or required in a manner that is fully expressed by statute or rule.”

Finally, the Opinion identifies that WDNR may only lawfully impose conditions on high-capacity well permits pursuant to its authority at Wis. Stat. § 281.34 that relate to restrictions on: location, depth, pumping capacity, rate of flow, and ultimate use. Moreover, these conditions may only be levied against wells that contain certain characteristics described in Wis. Stat. § 281.34(4). Those conditions are: 1) the well is in a groundwater protection area; 2) the well will result in a loss of more than 95% of the water withdrawn; or 3) the well may have a significant impact on a spring.

Attorney General opinions do not carry the force of law, but they can influence agency policy and judicial opinions. This Opinion is likely to change internal WDNR policy to eliminate the consideration of cumulative impact analysis in high-capacity well permitting decisions and limit any high-capacity well permit conditions to those explicitly described in the statutes. We will continue to monitor the impact of this Opinion on the imposition of conditions on permitting across state agencies.

For more information, please contact your Michael Best attorney; Cameron F. Field at cffield@michaelbest.com or 608.283.2259; David A. Crass at dacrass@michaelbest.com or 608.283.2267; or Jordan J. Hemaidan at jjhemaidan@michaelbest.com 608.283.4431.

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